Business, Investments

Beats Electronics to soon join hands with Apple

Apple is reportedly looking to buy the California based handset maker for a massive USD 3.2 billion, per Forbes‘ Gary Allen. As said, the deal would allow Apple to reap many benefits in order to scale high in the music streaming space.

Beats was launched in 2008 with an aim to provide quality headphones, devices and services. It is a venture of Dr. Dre (artist and producer) and Jimmy Iovine (Chairman of Interscope Geffen A&M Records). The company has partnered with some of the major brands such as HP, Chrysler Group and HTC Mobile.

In March this year, the company acquired marketing software and service provider Topsin Media for an undisclosed amount. Also, it recently launched its iPad app. It is backed by investors such as Access Industries, Marc Rowan and James Packer.

At present, it is one of the most sought music streaming service and has a user base of 800 million. If integrated with iTunes, it can create an entirely new subscription based revenue source for the company.

The Beats headphones and earplugs are popular accessories and are already a part of Apple retail stores. Also, the company’s partnership with Chrysler group can help Apple in improvising its recently launched product “Car Play”, which connects user’s iPhone to cars using Siri.

Apple is known for its low-profile talent acquisitions in past, however with an exception, the USD 345 million buyout of PrimeSense. In an interview with Wall Street Journal last month, the company CEO Tim Cook also said, “”We’re not anti-getting a big company. We are against doing something that’s not strategic.”

Also, the deal could be an indirect loss for HTC who invested USD 309 million for a 50.1 percent stake in Beats in 2011. But later sold it in two parts- one with USD 4.8 million net loss and other with USD 85 million profit. However, with the current valuation, the amount for HTC’s stake could reach up to USD 1.29 billion, per TechCrunch‘s Matt Burns.

Post acquisition, the founder Jimmy Iovine could be a part of Apple’s team. The deal is expected to get finalized by the end of this week.

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