Media

Apple finally confirms its $3B acquisition of Beats Electronics

Image Credit: via cfaulkner/Flickr
NOTE: GrowthBeat tickets go up $200 this Friday at 5pm Pacific. VentureBeat is gathering the best and brightest in modern digital marketing to help declutter the landscape, simplify the functions, clarify the goals, and point the way to success. Get the full scoop here, and register by Friday to save!

Apple today confirmed weeks of rumors by announcing that it’s acquiring Beats Electronics in a deal worth $3 billion.

The purchase means Apple will now be able to expand its hardware business into premium headphones. It also gives Apple an on-demand streaming music service via Beats Music, which the company has previously been hesitant to do for fear that it would cannibalize digital download sales on iTunes.

The deal itself includes a purchase price of approximately $2.6 billion in cash and approximately $400 million in stock that will vest over time for both Beats Electronics and its Beats Music streaming music service. That’s a tad lower than what sources originally reported ($3.2 billion), but it’s still quite a bit of money. (Also the amount hardly puts a dent in Apple’s mountain of cash — nearly $160 billion, according to the company’s last SEC filing.)

“Music is such an important part of all of our lives and holds a special place within our hearts at Apple,” said Apple CEO Tim Cook in a statement about the deal. “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.”

As part of the deal, Beats CEO Jimmy Iovine and iconic rapper and Beats cofounder Dr. Dre will join Apple. This is something that bystanders speculated about in the days after news of the acquisition leaked, with Iovine said to be Apple’s choice to take over its digital media business. Apple, however, did not disclose in the release what roles Iovine and Dre will assume at the company.

“I’ve always known in my heart that Beats belonged with Apple,” said Iovine in a statement. “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.”

Apple said it expects the acquisition deal to close in the fiscal fourth quarter, provided that everything passes regulatory approval.


Related: Beats by Apple: Why a deal makes sense — and what it says about today’s Apple


Many people expected Apple to announce the Beats acquisition during the company’s Worldwide Developers Conference next month, but it looks like Apple didn’t want to overshadow any other announcements the company may have planned. And while Apple didn’t mention anything about WWDC, I’d be shocked if the company didn’t expand on its plans for Beats at the event.

More about the companies and people from this article:

Apple designs and markets consumer electronics, computer software, and personal computers. The company's best-known hardware products include the Macintosh line of computers, the iPod, the iPhone and the iPad. Apple software includes t... read more »

Beats Music is a music streaming service spun out of Beats Electronics and into its own company in early 2013. The core experience will be centered around curated playlists created by musicians and music writers. It is currently in pri... read more »

Powered by VBProfiles

15 comments
j .D
j .D

This just PROVES that Apple has hit a technological apogee, they're dried up, they're over the hill, everything that they were... died with Steve Jobs.  What they can't acquire now, they simply will not have... they will no longer be the vanguard of change and novelty... they are merely trying to buy into current trends because creatively... they're history.

Joel Reyna
Joel Reyna

Headphones, Streaming Service, Intellectual Property, and all of the above.

Mind Dots
Mind Dots

Apple once again will turn around the music industry with this acquisition. They will certain power automobiles, in-vehicle infotainment industry

Mateo Williford
Mateo Williford

If you're feeling kind of cruddy, just stick beside your buddy, and don't eat too much fried food.

William Griggs
William Griggs

I wonder if the $$$ went down after Dr. Dre's rant...

Tom Cheredar
Tom Cheredar

Hopefully they don't integrate iAds into Beats anytime soon.

Greg Davies
Greg Davies

Don't forget, this is NOT just headphones... It means Apple will have a solid streaming music service now too.

Vi Tran
Vi Tran

Beats make terrible headphones. Fantastic at marketing though

Jey Van-Sharp
Jey Van-Sharp

Apple' has plenty of lifestyle brain power- from  Drexler (J. Crew), Deneve (YSL), Angela (Burberry), & Now Jimmy & Dre. Interesting to see what will come of it.