Apple reportedly nearing $3.2B acquisition of Beats Electronics
In a somewhat surprising move, Apple is rumored to be in talks with Jimmy Iovine and Dr. Dre's Beats Electronics that could see the audio accessories and music streaming service acquired for $3.2 billion.
Beats Audio CEO Jimmy Iovine. | Source: All Things D
Citing sources close to the deal, The Financial Times on Thursday reported that an Apple-Beats tie up could happen as early as next week. The publication cautioned, however, that final details have yet to be hammered out and talks may ultimately dissolve.
News of the rumored talks have been corroborated by Bloomberg, The Wall Street Journal and The New York Times, among others.
Under the supposed deal, Apple would gain control of Beats' audio hardware division as well as the firm's subscription-based music streaming service. The Beats management team would report to Apple CEO Tim Cook.
Apple and Beats are not known to have a strong relationship aside from showcasing the company's Beats by Dre headphones and speakers in the Apple Store. However, late Apple cofounder Steve Jobs personally worked with Iovine in when the music executive headed up record label Interscope Geffen.
In an interview last year, Iovine claimed he pushed Jobs toward a subscription music service in the early 2000s.
"So I met [Jobs] and we hit it off right away. We were really close," Iovine said. "We did some great marketing stuff together: 50 Cent, Bono, Jagger, stuff for the iPod -- we did a lot of stuff together. But I was always trying to push Steve into subscription. And he wasn't keen on it right away."
Apple ultimately rolled out iTunes Radio, while Beats launched the subscription-based Beats Music streaming service. Most recently, the company decided to enablein-app subscription purchasing as a way to drum up sales.
With a rumored $3.2 billion acquisition, Apple would be paying above accepted company valuation. Beats recently netted a $500 million investment from Carlyle that valued the company at $1 billion.
During Apple's recent quarterly earnings conference call in April, Cook revealed the company made 24 acquisitions over the past 18 months. Considering the company has never spent more than$1 billion for a company, the rumored $3.2 billion purchase of Beats would be unprecedented.
However, Cook said during the earnings call that Apple was "on the prowl" for potential acquisitions that would further enhance its existing and future product lineups.
"We don't have a rule that says we can't spend a lot or whatever," Cook said. "We'll spend what we think is a fair price."
Beats Audio CEO Jimmy Iovine. | Source: All Things D
Citing sources close to the deal, The Financial Times on Thursday reported that an Apple-Beats tie up could happen as early as next week. The publication cautioned, however, that final details have yet to be hammered out and talks may ultimately dissolve.
News of the rumored talks have been corroborated by Bloomberg, The Wall Street Journal and The New York Times, among others.
Under the supposed deal, Apple would gain control of Beats' audio hardware division as well as the firm's subscription-based music streaming service. The Beats management team would report to Apple CEO Tim Cook.
Apple and Beats are not known to have a strong relationship aside from showcasing the company's Beats by Dre headphones and speakers in the Apple Store. However, late Apple cofounder Steve Jobs personally worked with Iovine in when the music executive headed up record label Interscope Geffen.
In an interview last year, Iovine claimed he pushed Jobs toward a subscription music service in the early 2000s.
"So I met [Jobs] and we hit it off right away. We were really close," Iovine said. "We did some great marketing stuff together: 50 Cent, Bono, Jagger, stuff for the iPod -- we did a lot of stuff together. But I was always trying to push Steve into subscription. And he wasn't keen on it right away."
Apple ultimately rolled out iTunes Radio, while Beats launched the subscription-based Beats Music streaming service. Most recently, the company decided to enablein-app subscription purchasing as a way to drum up sales.
With a rumored $3.2 billion acquisition, Apple would be paying above accepted company valuation. Beats recently netted a $500 million investment from Carlyle that valued the company at $1 billion.
During Apple's recent quarterly earnings conference call in April, Cook revealed the company made 24 acquisitions over the past 18 months. Considering the company has never spent more than$1 billion for a company, the rumored $3.2 billion purchase of Beats would be unprecedented.
However, Cook said during the earnings call that Apple was "on the prowl" for potential acquisitions that would further enhance its existing and future product lineups.
"We don't have a rule that says we can't spend a lot or whatever," Cook said. "We'll spend what we think is a fair price."
Comments
OOOOooooooooo... really? I am shocked!
Brand killing? Or... will be part of iTunes?
What about... 5x of this money for Yahoo!
I still like Yahoo! to be acquired by Apple. Nice dream though.
Uh… huh.
In other news, Beats Electronics’ stock price is up 500 trillion percent. For tonight. And tomorrow morning, when it comes out that this isn’t happening, we’ll have a few new millionaires.
Oh, wait, they’re not public. Makes it even more strange.
I hope this isn't true. What a terrible idea.
Beats offers nothing to Apple, the brand images are nearly polar, and their "technology" is nothing Apple couldn't create in house. Their music streaming service is weak and has little market share.
Buying would be an utter failure, especially at 3.2 B.
For sake...don't these rumors get filtered?
Why?
Beats make over priced mediocre headphones and a music service few use. $3.2B???
I can think of several companies I wish Apple would buy like Broadcom, Netflix, or Nintendo then close their hardware and move all game titles to iOS and OS X. I really hope this rumor is bogus.
This makes no sense. Anybody who know anything about audio know that Beats are way over priced for what they are. You can get better quality from Sennheiser for half the price. As for the streaming service, apple already has iTunes radio. That would mean apple is paying for a brand name rather than tech or talent. Just doesn't seem likely. And Dr. Dre may sell the headphones but he sure doesn't use them in the studio when he's mixing his own music.
Beats Electronics has nothing of value for the future. They're just a marketing company selling overpriced crap-tier speakers.
http://time.com/74886/best-headphones/
Hopefully Apple have another reason, but what, do Apple need their streaming business? It surely can't be the bass heavy headphones.
[IMG ALT=""]http://forums.appleinsider.com/content/type/61/id/42879/width/500/height/1000[/IMG]
Awesome, great way to market to mall food court thugs.
Didn't Beats recently release a Spotify like service? It has gotten some pretty good reviews.
However, more importantly, from Apple's perspective, it has a license from the record companies to deliver music on demand, unlike iRadio. And there have been rumors that the record companies do not want to give Apple the license to offer a Spotify like service.
Keeping that in mind, this is most likely an acquisition for the licenses to create a Spotify competitor, than anything else.
Also, the CEO seems like a smart dude. Might also be a talent acquisition.
I just read a review on headphones and they were right at the bottom.
http://time.com/74886/best-headphones/
Hopefully Apple have another reason.
Their Beats Music music service has been well reviewed. Also, as I suggest in my earlier comment, Apple has been rumored to have trouble acquiring licenses to music catalogs from the record companies in order to create a Spotify competitor. This is an indirect way to do just that.
Edit: Macrumors seems to think its a play for Beats Music also. That would make a lot more sense to me. Instead of fudging around building a new music service, and spending months negotiating with the music industry in talks which could fall apart at the last second, further delaying the launch of a revamped iTunes, Apple figured it would pay a slight premium to acquire Beats Music, and get the new iTunes going as soon as possible.