Troubled smartphone maker HTC said it is to sell its remaining 24.84 per cent stake in headphones maker Beats Electronics, ending a two-year equity relationship between the two companies.
HTC said it will receive $265 million for the stake, plus a $150 million promissory note and accrued interest. The transaction is expected to complete in the fourth quarter of 2013.
The devices company first took a 50 per cent economic stake in Beats in August 2011, when it was reported that the price tag was around $300 million. This was subsequently cut to its current level in July 2012, when it sold part of its stake to Beats’ founders for $150 million – seeing a loss of $4.9 million in the process.
HTC said it expects anticipated pre-tax profit from the current disposal to be TWD2.52 billion ($85.21 million), based on the value assigned in its first half 2013 financial report.
Since the companies’ first tie-up, Beats’ technology – and branding – has featured in a range of HTC’s premium and upper mid-tier smartphones.
A statement said: “Over the past two years, HTC and Beats have enjoyed a solid business partnership in delivering superior mobile audio experiences for consumers worldwide. HTC and Beats will continue to partner as future opportunities arise.”
The deal will also provide something of a financial boost for HTC, which is set to announce a loss for the third quarter of 2013, as it clears its inventory of older devices which are still in the channel.
The company is in the process of refreshing its mid-tier device line, where its aging product line has seen its market share slip in the face of intensive competition from a raft of mass-market smartphone players.
Reuters reported that the move comes as Carlyle Group is set to make a $500 million investment in Beats, which will value the consumer electronics company at more than $1 billion.