Sirius XM Holdings Inc said on Friday it will invest $480 million in Pandora Media Inc, giving the satellite radio company better exposure to internet music streaming while providing financial footing to Pandora.

While Sirius XM has a strong presence in the auto market, where its channels are offered in most new cars in the United States, it has trailed Pandora and other music providers in mobile and streaming content. The relationship could give Sirius expertise in expanding its listening base outside of the car.

"We believe there are future opportunities to accelerate Pandora's growth and further increase stockholder value," Sirius XM Chief Executive Officer Jim Meyer said in a statement.

While the companies did not provide details about how they would work together, Barclays analyst Kannan Venkateshwar said Sirius XM could bundle Pandora services to its customers, similar to how Amazon sells HBO and Showtime subscriptions.

Pandora CEO Tim Westergren said the investment "infuses resources to help Pandora continue to grow and innovate."

Pandora's shares have lost more than 30 percent over the past 12 months, and the company has never turned a profit on an annual basis.

As of Friday, Pandora's market capitalization of approximately $2 billion was dwarfed by Sirius XM's $25 billion.

Sirius XM, controlled by media mogul John Malone's Liberty Media Corp will receive three board seats and appoint the chairman. Sirius is prevented from buying additional Pandora stock for 18 months and will not buy more than 31.5 percent of Pandora after that period.

The deal ends a strategic review by Pandora and should ease pressure from activist investor Corvex Management LP that goes back more than year. The deal is a "new opportunity" for Pandora that raises its value, Corvex CEO Keith Meister told CNBC on Friday.

The investment also ends an earlier agreement for KKR & Co to make an equity investment. KKR will get a $22.5 million termination fee.

Reuters first reported on Thursday that Sirius XM was looking to invest in Pandora after their merger negotiations fell apart, citing sources.

While Sirius XM agreed to a standstill agreement for 18 months, it probably does not rule out an outright acquisition of Pandora later, analysts said.

As of Friday, Pandora's market capitalization of approximately $2 billion was dwarfed by Sirius XM's $25 billion.

Sirius XM, controlled by media mogul John Malone's Liberty Media Corp will receive three board seats and appoint the chairman. Sirius is prevented from buying additional Pandora stock for 18 months and will not buy more than 31.5 percent of Pandora after that period.

The deal ends a strategic review by Pandora and should ease pressure from activist investor Corvex Management LP that goes back more than year. The deal is a "new opportunity" for Pandora that raises its value, Corvex CEO Keith Meister told CNBC on Friday.

The investment also ends an earlier agreement for KKR & Co to make an equity investment. KKR will get a $22.5 million termination fee.

Reuters first reported on Thursday that Sirius XM was looking to invest in Pandora after their merger negotiations fell apart, citing sources.

While Sirius XM agreed to a standstill agreement for 18 months, it probably does not rule out an outright acquisition of Pandora later, analysts said.