Apple officially acquires Beats for $3 billion
Consider that other
shoe beat dropped: Apple on Wednesday confirmed that it has in fact acquired both Beats Electronics—maker of Beats headphones, speakers, and audio software—and Beats Music—the streaming subscription music service—for about $3 billion total.
The much-discussed deal, which was first rumored earlier this month, will see Beats co-founders Jimmy Iovine and Dr. Dre (pictured above with Apple’s Tim Cook and Eddy Cue) join Apple, though the company doesn’t specify in what capacities. The acquisition of Beats, which takes the form of $2.6 billion in cash and around $400 million that will vest over time, marks the largest purchase in Apple’s history; that title was previously held by the Next Software deal in 1997, which totaled about $400 million and saw Apple co-founder Steve Jobs return to the company. The Beats deal is expected to close in the fourth quarter of the year, subject to regulatory approval.
“Music is such an important part of all of our lives and holds a special place within our hearts at Apple,” Tim Cook, Apple’s CEO, said in the company’s statement. “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.”
A big part of the acquisition certainly seems to focus on the music streaming service. Not only is it mentioned first in the press release—and described as “critically acclaimed”—but it’s also mentioned as part of Apple’s music lineup by senior vice president of Internet Software and Services, Eddy Cue: “The addition of Beats will make our music lineup even better, from free streaming with iTunes Radio to a world-class subscription service in Beats, and of course buying music from the iTunes Store as customers have loved to do for years.”
Beats Electronics, meanwhile, seems as though it will continue to operate under its own brand. Apple says its products will be sold “in many more countries” through the Apple Online Store and Apple retail stores, as well as certain Apple Authorized Resellers. In particular, Apple highlights the company’s signature style and its association with many prominent musicians, atheletes, and other celebrities.
Besides the hardware, software, and services, the additions of Dre and Iovine also seem to be major selling points for the deal. Iovine is touted as having been a significant partner for Apple, as well as a major mover in the music industry.
“I’ve always known in my heart that Beats belonged with Apple,” Iovine said in Apple’s release. “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.”