Apple confirmed its anticipated acquisition of headphones and music streaming company Beats Electronics in a $3 billion deal.
In a statement, Tim Cook, Apple’s CEO, said: “Music is such an important part of all of our lives and holds a special place within our hearts at Apple. 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”.
The deal will also see Beats’ co-founders, Jimmy Iovine and Andre Young (Dr Dre), joining Apple. Some $2.6 billion of the purchase price will be paid immediately, with approximately $400 million that will vest over time.
Eddy Cue, Apple’s SVP of internet software and services, said: “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.”
Initial reactions to the deal have been mixed. While Beats’ music service will complement Apple’s own proposition, it is not a market leader in its own right. And while Beats will provide Apple with an additional hardware revenue stream, its strength has largely come through branding and marketing rather than technical prowess.
Ailing Taiwanese device maker HTC had previously held a significant share in Beats, with Beats branding featuring in its high-end smartphone portfolio. But the company sold its final shareholding in Beats last year.