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