After weeks of rumor, Apple finally announced it has acquired headphone maker Beats Electronic for $3 billion, including $2.6 billion cash up front and approximately $400 million in stock that will vest over time. As part of the deal, Beats co-founders Dr. Dre and Jimmy Iovine will join Apple in undisclosed roles.
The $3 billion purchase price includes Beats Music, the sister company that runs a subscription streaming music service. In fact, Apple's press release mentioned that before the more well-known headphone business. While some analysts have wondered why Apple doesn't simply build its own streaming service within iTunes, Cook must believe this deal gives him a quicker way to catch up with Spotify and others.
More Recently, When Apple Bought The Headphone Company Beats Electronics, Part Of A $3 Billion Deal
News first broke on May 8 of Apple closing in on what was then thought to be a $3.2 billion deal to purchase the audiocomapny founded in 2006 by Iovine and Dr. Dre. In addition to manufacturing headphones and mobile speakers, Beats launched its own music streaming company Beats Music this past January.
The sale is a significant payout for Iovine and Dr. Dre, who launched the Santa Monica, Calif.-based company in 2008 as a venture that produces colorful headphones at a premium price of around $300. Its products, which became fashion accessories, were produced by Monster Cable until 2012, when founders bought back control of the company from Monster and mobile hardware maker HTC.
Apple is known for making smaller acquisitions in a quest to buy technology and managerial talent. Its largest acquisition prior to Beats was a $400 million deal for Next Software when Steve Jobs was the CEO of Next. Beats is privately held; however, sources have quoted the transaction at 3x sales. Given Apple's $150 billion cash hoard, an acquisition of this size and scope would be little more than a rounding error.
The technology industry has been buzzing with the news that Apple Inc. plans to remove the headphone jack in its immensely popular iPhones. In the past, the headphone industry never used to make much news, until Apple bought Beats Electronics for $3 billion. Given this latest development, the headphone industry will now face a critical situation, even more so than the mobile industry. Lightning-based headphones can offer a superior experience, and Bluetooth audio has come a long way in recent years, but one of the most popular players in the market, Skullcandy, stands to benefit a great deal as it is the only pure-play headphone company. Skullcandy has been adept at keeping up with trends not only in the headphones market, but also in the networking space, by getting rid of MPLS to improve business productivity and meet a rise in demand.
After weeks of speculation, Apple confirmed just moments ago that it has reached a deal to acquire Beats Electronics and Beats Music for $3 billion. Beats co-founders Jimmy Iovine and Dr. Dre will be joining Apple, the company announced. Beats is best known for its popular lineup of headphones, speakers and audio software, and in January launched a new streaming music service called Beats Music in partnership with AT&T.
By 2014, Apple had acquired Beats Electronics and the company's subscription streaming music service Beats Music in a deal that would total $3 billion. As part of the deal, Iovine and Dre, billed as pioneers, artists and entrepreneurs, would effectively join the Apple team.
In a recent example, while James was leading the Heat to a victory over the Indiana Pacers in the Eastern Conference finals, sources say the 29-year-old was finalizing what is believed to be the biggest equity cash payout for a professional athlete in history as part of Apple's recent $3 billion purchase of Beats Electronics. Sources briefed on the situation say James realized a profit of more than $30 million in cash and stock in the Beats sale after he had struck a deal to get a small stake in the company at its inception in 2008 in exchange for promoting its high-end headphones.
In a recent example, while James was leading the Heat to a victory over the Indiana Pacers in the Eastern Conference finals, sources say the 29-year-old was finalizing what is believed to be the biggest equity cash payout for a professional athlete in history as part of Apple's recent $3 billion purchase of Beats Electronics. Sources briefed on the situation say James realized a profit of more than $30 million in cash and stock in the Beats sale after he had struck a deal to get a small stake in the company at its inception in 2008 in exchange for promoting its high-end headphones.Advertisement
While the price tag represents an iota of Apple's roughly $150 billion cash hoard, it marks a significant departure for a company that for two decades has stuck mainly to acquisitions worth hundreds of millions of dollars. The deal is seen as Apple's effort to jump-start an uneven attempt to make headway in music streaming, the fastest-growing segment of the market, as iTunes sales decline. Pandora Media Inc and Spotify have raced ahead while Apple's eight-month-old iTunes Radiohas not made much of a dent. 2ff7e9595c
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