Apple will be paying $3 billion to take over the Beats headphone and music streaming company. As part of the acquisition, Beats co founders Jimmy Iovine and Dr. Dre will join Apple.
The transaction is still subject to regulatory approvals, and the phone company expects everything to be done by the end of the four quarter of this year but they didn’t explain why Apple was buying the company.
Apple’s CEO Tim Cook said the deal would allow the firm to “continue to create the most innovative music products and services in the world”.
There is however a lot of speculation that Apple, which once dominated the digital music sales market has lagged newer rivals that offer music streaming instead. Beats, which is best known for high-priced, fashion brand headphones also has its own music streaming service.
Apple has never supported a 3rd party brand in its services, this is the very first time, and it is willing to retain the Beats brand, which is the company’s main asset as it goes forward.
Beat Headphones’ had tried another deal before with Taiwan’s HTC. Beats Headphones bought a 50.1 percent stake in the headphone company in 2011 for $300 million in an attempt to bolster its reputation for high quality speakers in its smartphones. The deal proved unsuccessful though, and HTC sold half the stake back a year later for $150 million.
Late last year, it sold the rest back to the company for $415 million, valuing the firm at around $1.2 billion. In hindsight, had HTC held onto that stake, it would have been worth nearly a billion dollars, a windfall for the struggling smartphone manufacturer.