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Apple in Talks to Acquire Beats Electronics in Reported $3.2 Billion Deal [u]

Screenshot 2014 05 08 15 24 44

Is Apple about to make it rain and drop some dollars on Beats Electronics? According to the Financial Times, Apple is reportedly finalizing a $3.2 billion deal to acquire the company:

Apple is closing in on its largest ever acquisition with the planned $3.2bn purchase of Beats Electronics, the headphone maker and music streaming operator founded by music producer Jimmy Iovine and the hip-hop star Dr Dre.

The deal could be announced as early as next week, people familiar with the negotiations said, but they cautioned that some details had yet to be agreed and talks could still fall apart.

This acquisition could be Apple’s largest yet, as they will acquire the Beats streaming music service, along with its headphone business, with management reporting directly to Cook, say sources.

The deal to acquire Beats would possibly be a play to allow Apple to jump right into the streaming music subscription service, to help compensate for the recent drop in digital music downloads in iTunes. The Financial Times alludes the acquisition could bring back some ‘cool’ factor to Apple to battle rival Samsung and their marketing campaign against the company.

After making relatively small company acquisitions in the hundreds of millions of dollars range, it seems insane Apple would drop $3.2 billion in a heartbeat for Beats Electronics. Maybe doing so would bypass some music royalties they would have to pay in the long run if they were to go at a music subscription service alone?

Update 7:54PM PDT: The New York Post reports Beats Electronics co-founder and influential music executive Jimmy Iovine is in talks to join Apple:

Beats Electronics boss and veteran music industry executive Jimmy Iovine is in talks to join Apple as a “special adviser” to Tim Cook on creative matters, two sources close to talks tell The Post.

Iovine, who is the co-creator of Beats with partner Dr. Dre, is also chairman of Universal Music Group’s Interscope, Geffen and A&M labels, home to Lady Gaga and Eminem, among others

Founder and Editor-in-Chief of iPhoneinCanada.ca. Follow me on Twitter, and @iPhoneinCanada, and on Google+.

  • einsteinbqat

    BEATS? BEATS? Why does it have to be Beats? Honestly!

  • Chrome262

    NOOOOOO, worse over priced headphones ever

  • Chrome262

    seriously, why not just buy Samsung if they want cheap copies of good product.

  • einsteinbqat

    I don’t get this one. What could Apple really be getting out of this? Patents?

  • Shameer Mulji

    Think streaming music and wearable computing. And as you said, probably patents too.

  • Shameer Mulji

    You seriously think this is about headphones?

  • http://www.iphoneincanada.ca/ Gary

    What makes this story seem really weird is how Apple will supposedly go from mini acquisitions to a sudden $3.2 billion deal. That doesn’t sound fiscally responsible, especially for Beats; are they really worth that much as a whole package??

  • Peter Pottinger

    This is about buying into the black market. No pun intended.

  • Chrome262

    No, but they still suck for what they cost.

  • sukisszoze

    It will be interesting to see what Apple is really paying $3.2B for…

  • http://www.ryantoyota.com/ Ryan

    Agreed. I’ve tried them out several times in stores, thinking perhaps I got a dud pair to try out previously. Each time I shake my head, shocked that people would pay so much for them. My $60 Koss PortaPros sound better than the $200–$300 Beats models I’ve tried.

  • Anon

    It’s not about SQ when it comes to beats. It’s all looks and marketing hype to the younger crowd that don’t know any better, and they do it well. Ask any teenie about which headphones they want, and they immediately say “beats”. But now that Apple is buying them out, they will most likely inject quality into the product lines. So those over priced $300 Dre Studios, may actually be worth it’s price once Apple puts their stamp on them.

  • http://www.ryantoyota.com/ Ryan

    I know it’s not about sound quality. Their sales are entirely based on fashion.

    But what bugs me about that is that they’re being marketed (and the company is being marketed) the opposite way. I just watched an interview with Jimmy Iovine where he talked about how proud he was that he was able to make kids care about music quality. Their advertising states that they were created so that customers could hear their music the way that it was heard in the studio. All BS, and it seems like they’re in so deep they believe it themselves.

    The worst part of it all is that it’s working. Beats are crazy successful. I don’t see Apple spending a ton of money to change something that isn’t broken from a consumer or sales standpoint.

  • Anon

    Google “Beats sound quality”, and the first thing you hit is “Beats by Dre are Extraordinarily bad”band tons for bad reviews. Now google “Apple quality” and you get “Apple focuses on quality products. There is no way Apple is going to let the shitty SQ of the beats line slide. 3.2 Billion is really peanuts when it comes to Apple, so an extra billion or so to fix the SQ issue will do a lot more for them in the long run.

  • KingOfTdot

    Detox should be part of the $3.2 Billion deal.