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Apple Confirms Beats Buy for $3B

Sarah Thomas
5/28/2014
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Nearly three weeks after Dr. Dre's infamous video-selfie news leak, Apple has confirmed its acquisition of Beats for $3 billion, slightly less than originally thought, but still its biggest M&A deal to date. (See Apple Buying Beats for $3.2B: Dr. Dre & Tyrese.)

Apple Inc. (Nasdaq: AAPL) confirmed the acquisition on Wednesday evening, a few days before its annual developers' conference where more big news -- including a push into the smart home -- is expected.

The iPhone maker is getting both Beats Music, its subscription streaming service, as well as Beats Electronics, the brand's line of headphones and speakers popular with youngsters. It's also getting two new executives, Beats co-founders Jimmy Iovine and Dr. Dre, the self-proclaimed richest man in hip hop.

Iovine said in a release that his company was inspired by Apple's "unmatched ability to marry culture and technology" when it was formed in 2008, and Apple CEO Tim Cook noted that the pair will "continue to create the most innovative music products and services in the world."

Since the impending deal was first unveiled in early May, there's been a lot of talk over why Apple would splash down so much cash on a headphones brand that some say has lost its cache, especially considering it has its own iTunes Radio streaming service. The answer, according to the Cupertino giant, seems to have the most to do with its streaming service and catalog of music. (See Apple iTunes Radio Brings the Beat to LTE.)

Apple said it will offer Beats products in its online store, retail outlets, and select resellers, but, in announcing the acquisition, talked the most about the talent on the team and how it will bolster its music line up with its subscription service as well as within iTunes Radio and the iTunes store itself.

The deal is made up of $2.6 billion in cash and $400 million to vest over time. Its subject to regulatory approval, but Apple expects it to close in the fourth quarter.

— Sarah Reedy, Senior Editor, Light Reading

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Mitch Wagner
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Mitch Wagner,
User Rank: Lightning
5/29/2014 | 2:23:06 PM
Suggested name for the new company
@XeniJardin has a good idea.
DHagar
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DHagar,
User Rank: Light Sabre
5/29/2014 | 2:00:11 PM
Re: Apple Confirms Beats Buy for $3B
@Dan, that seems to be their focus and you make good points.

We will have to watch and see if that is truly where the value is created as this goes forward.
SReedy
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SReedy,
User Rank: Blogger
5/29/2014 | 9:56:32 AM
Re: Apple Confirms Beats Buy for $3B
Very true. That was clear from Cook's interviews on the deal. Dr. Dre and Jimmy Iovine are now full-time Apple employees...I wonder how they'll like having bosses again!
DanJones
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DanJones,
User Rank: Blogger
5/28/2014 | 11:48:54 PM
Re: Apple Confirms Beats Buy for $3B
You're missing what they're getting in terms of powerhouse music and film people. Take a look at what Jimmy Iovine has done in music and film.

Then add in Dr Dre as a hip hop powerhouse. I suspect this buy is as much people driven as a technology buy.
DHagar
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DHagar,
User Rank: Light Sabre
5/28/2014 | 8:37:50 PM
Apple Confirms Beats Buy for $3B
Sarah, I am with you on this; I don't see the need to buy them to stream music.

I believe it is much more strategic.  In reading the interview, I would see a more "hidden" agenda in the comments on talent, and what they can create for the future.  There must be more to this deal, in my way of thinking.
SReedy
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SReedy,
User Rank: Blogger
5/28/2014 | 6:17:32 PM
Cook on Beats
Here's some more on the acquisition from Tim Cook himself...still seems a little weird to me. http://recode.net/2014/05/28/tim-cook-explains-why-apple-is-buying-beats-qa/
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