Apple has just announced it has acquired Beats Music and Beats Electronics for $3 billion, consisting of $2.6 billion in a cash purchase price where $400 million of that will vest over time in stock options:
“Music is such an important part of all of our lives and holds a special place within our hearts at Apple,” said Tim Cook, Apple’s CEO. “That’s why we have kept investing in music and are bringing together these extraordinary teams so we can continue to create the most innovative music products and services in the world.”
“I’ve always known in my heart that Beats belonged with Apple,” said Jimmy Iovine. “The idea when we started the company was inspired by Apple’s unmatched ability to marry culture and technology. Apple’s deep commitment to music fans, artists, songwriters and the music industry is something special.”
Beats co-founders Dr. Dre and Jimmy Iovine will be joining Apple, as previously rumoured.
Eddy Cue, Apple’s senior VP of Internet Software and Services had this to say:
“Music is such an important part of Apple’s DNA and always will be,”
“The addition of Beats will make our music lineup even better, from free streaming with iTunes Radio to a world-class subscription service in Beats, and of course buying music from the iTunes Store as customers have loved to do for years.”
Apple says the deal should close in the fourth quarter and is subject to regulatory approvals.
Just yesterday the NY Post accurately reported the deal figure had been reduced to $3 billion instead of the initial $3.2 billion number mentioned weeks ago.
Speaking to the New York Times, Apple CEO Tim Cook stressed the acquisition was about the people and the service:
Mr. Cook called the deal a “no-brainer.” He said that Apple had bought 27 companies since last year, but that did not mean Apple had to buy those companies.
“Could Eddy’s team have built a subscription service? Of course,” he said. “We could’ve built those 27 other things ourselves, too. You don’t build everything yourself. It’s not one thing that excites us here. It’s the people. It’s the service.”
As for what to expect from Dr. Dre and Iovine? Cook said they will be coming up with things that will “blow your mind”:
“They’re going to be coming up with ways of features that blow your mind,” he said, “and products you haven’t thought of yet, and seeing around the next corner to articulate the way to take music to an even higher level than it is now.”
The Wall Street Journal reports the titles of Dr. Dre and Jimmy Iovine at Apple will be known simply as just “Jimmy and Dre”. Both men will work at Apple’s electronics and music-streaming divisions, helping connect Silicon Valley and Hollwood, as Cook puts it:
“The ugly truth is that there is such a Berlin Wall between Silicon Valley and L.A.,” Mr. Cook said in an interview. “The two don’t respect each other, don’t understand each other.
“We think these guys have a very rare talent,” Mr. Cook continued. “We love the subscription service that they built—we think it’s the first one that really got it right.”
…more to follow