Apple Rumored to Be Buying Beats Electronics
Apple (NASDAQ:AAPL) may soon acquire premium headphone maker and music-streaming service provider Beats Electronics for $3.2 billion, according to unnamed “people familiar with the negotiations” cited by the Financial Times. The sources noted that the deal could be concluded as early as next week, assuming that the two sides can agree on various details.
The acquisition of Beats would be Apple’s biggest company purchase in its history. The most Apple has ever paid for a company was in 1997 when it acquired NeXT for $400 million in a deal that also returned Steve Jobs to the company he helped to start.
Beats was founded by Interscope Geffen A&M chairman Jimmy Iovine and hip hop artist Dr. Dre in 2008. As noted by the Financial Times, the Carlyle Group valued Beats at over $1 billion when it made a $500 million investment in the company in September 2013. According to IDC data cited by Bloomberg, Beats holds an approximate 65 percent share of the headphone market.
So what does Apple gain from such a large purchase? Besides immediately acquiring a significant slice of the premium headphone market, Apple would also gain Beats Music — the recently launched subscription music-streaming service. Beats Music was unveiled in January and has since generated more than “690 years worth of listening hours to date” from its community of subscribers, according to Beats Music’s official blog. Beats Music differentiates its service from other music-streaming services with its “expert-curated playlists” and a music selection feature known as “The Sentence,” which allows Beats mobile app users to receive a playlist based on a sentence describing how they are feeling or where they are at.