Apple has officially acquire Beats Electronics for $3 billion, after a few weeks of rumors about the deal and it potentially getting called off by Apple at the last second, we finally have the confirmation from both companies, along with a few interviews.
The deal will be split $2.6 billion in cash and $400 million in stock, $200 million has been shaved off the deal since we heard the first rumor. Apple has added the two co-founders Jimmy Iovine and Dr. Dre onto their executive board, included in the deal.
This is the biggest acquisition in Apple’s history and puts them in the billion dollar club with Google, Microsoft, Facebook and a few other large technology companies, who can afford to splash billions of dollars on hot new talent.
Apple doesn’t take a huge hit from the $3 billion acquisition, considering they already have over $150 billion saved up. This is the first time Apple has went out of their way to acquire a company, rather than develop the service or product internally.
The factors surrounding the deal remain largely unknown, CEO Tim Cook has only talked about the “talent” they are picking up from the deal, but no news on whether Apple will continue the hardware and software business Beats has built.
Beats has become one of the most prominent headphone brands in the world, offering a new look and brand everyone will recognised, backed by popular artists. Some call Beats expensive and underwhelming, but that hasn’t stopped them drawing in the buyers.
Not only does Beats have a strong audio hardware business, they recently acquired MOG and renamed it to Beats Music. This could be another avenue for Apple to acquire Beats, considering they are in the market for an actual music streaming service.
iTunes has had problems in the past few years competing with services like Spotify and Beats Music feels like a good move for Apple, to continue making revenue in the music business and providing more than $1 singles.