×
You will be redirected back to your article in seconds

Apple Seals $3 Billion Deal to Acquire Beats Music and Electronics

The Beats deal marks Apple's largest acquisition to date

Apple has sealed a $3 billion deal to acquire the Beats Music streaming service and Beats Electronics audio gear business founded by Jimmy Iovine and Dr. Dre.

The deal marks the largest acquisition in Apple’s history. As part of the deal, Iovine and Dr. Dre will sign on as Apple employees after the transaction is completed, marking a changing of the guard for both the technology and music sectors. Iovine was previously chairman of Interscope Geffen A&M, one of Universal Music Group’s largest label groups.

“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. “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.”

SEE ALSO: John Janick to Replace Jimmy Iovine as CEO of Interscope Geffen A&M

Deal calls for Apple to fork over $2.6 billion to acquire the Beats companies, with another $400 million in compensation to vest over time. Apple said it expects the deal to close by year’s end.

The Apple logo won’t suddenly cover up the ‘B’ on Beats’ products, with the brands expected to remain separate entities, the companies said.

Beats’ Twitter feed sent out this message to its 522,000 followers on Wednesday:

And in a memo to Apple employees, Cook wrote:

Beats Music was built with deep respect for both artists and fans. We think it’s the first subscription service to really get it right. … Beats Electronics has become the brand of choice for headphones and speakers in both the music and sports world, just five years after its launch.”

The sale is a significant payout for Iovine and Dr. Dre, who launched the Santa Monica, Calif.-based company in 2008 as a venture that produces colorful headphones at a premium price of around $300. Its products, which became fashion accessories, were produced by Monster Cable until 2012, when founders bought back control of the company from Monster and mobile hardware maker HTC.

Apple said it plans to expand the reach of Beats’ products, making them available in more markets around the world, especially through its online store, physical stores and authorized resellers. Beats’ headphones and portable Pill speakers already were sold in Apple’s outlets.

Apple’s plans to acquire Beats first emerged earlier this month.

Deal represents a shift in strategy for Apple, considering it stayed away from making major acquisitions under Steve Jobs’ leadership — it has made smaller purchases, acquiring 27 companies during its fiscal year 2013 until now. Jobs also was opposed to launching a music streaming service, opting to build a business around digital sales through the iTunes store, believing consumers wouldn’t want to rent music.

Beats Music launched in January as a subscription service for $10 a month. In March, it had 110,000 subscribers. Apple is now expected to use the streaming service to compete with Spotify, Google Play Music, Pandora and Last.fm

More Biz

  • Firefighters Respond to Brush Fire in

    Brush Fire Threatens Homes in Los Angeles' Pacific Palisades

    Firefighters are getting control of a brush fire that had threatened homes in Pacific Palisades, Calif., a wealthy neighborhood on the city’s Westside. The fire was first reported at 10:39 a.m., and was running uphill from 800 N. Palisades Drive. The fire threatened several homes on Charmel Lane and Vista Grande Drive, north of Sunset [...]

  • Warner Chappell Names Shani Gonzales Head of

    Warner Chappell Names Shani Gonzales Head of International, Executive VP of A&R

    Warner Chappell Music today announced the appointment of Shani Gonzales as Head of International, Executive Vice President of U.S., A&R. Based in New York, she will report to the company’s co-chair & CEO Guy Moot. Gonzales was most recently co-head of A&R at BMG U.S. and U.K., following stints at Epic Records and Def Jam. She [...]

  • Sony/ATV Names Dana Baxter Senior VP

    Sony/ATV Music Publishing Names Dana Baxter Senior VP of Corporate Communications

    Sony/ATV Music Publishing today announced the appointment of Dana Baxter as Senior Vice President, Corporate Communications, effective November 1.  According to the announcement, in this role, she will lead all global communications strategies to further advance Sony/ATV’s evolution and mission of putting songwriters first.  She will report to Jon Platt, Chairman and CEO of Sony/ATV and will [...]

  • Variety Cord Cutting Placeholder Cable

    Fox, Charter Strike New Carriage Deal

    Fox Corporation and Charter Communications, Inc. on Monday said they struck a new “long term” carriage deal for Fox’s suite of TV networks, the latest in a recent series of agreements Fox has struck with various distributors. Financial terms were not disclosed. The pact covers distribution of Fox Television Stations, Fox News Channel, Fox Business [...]

  • netflix debt

    Netflix to Raise Another $2 Billion Through Debt to Fund Massive Content Spending

    Netflix, burning boatloads of cash with a projected $15 billion content budget for 2019, is adding to its debt load once again. On Monday (Oct. 21), Netflix announced plans to offer approximately $2.0 billion aggregate principal amount of junk bonds, in both U.S dollar and euro denominations. As of Sept. 30, Netflix reported $12.43 billion [...]

  • Luciano Bernardini de Pace, Pietro Peligra

    Variety Announces Launch of Variety Italy

    Variety has announced the launch of Variety Italy, a new Italian-language international edition that will feature original as well as syndicated Variety content geared towards an Italian audience. The partnership marks the publication’s second international edition, following the announcement of Variety China earlier this year. Variety has partnered with Web Magazine Makers, led by president [...]

More From Our Brands

Access exclusive content