This article was originally published on May 29th 2014.
After news of a potential deal leaked last week (if you can call a drunken boast a ‘leak’), a deal has finally been completed by Apple for the acquisition of Beats Electronics. The Cupertino firm will pay $3bn for the company.
As a part of the deal, Beats co-founders Dr. Dre and Jimmy Iovine will join Apple full-time. The payment will be divided as $2.6bn up-front and $400m that will vest over time (these figures are approximate).
When we first heard about this deal, the figure was quotes at $3.2bn – the reason for the slight reduction at the time of completion is unclear. The sensationalist inside all of us likes to imagine that perhaps Apple were a little annoyed at Dr. Dre for leaking the deal early and so knocked the price down. More likely is that, rumour has it, Apple left it late to complete their due diligence and thus eventually settled on a slightly lower figure.
Whilst Beats is best known for its flagship range of oversized, over-ear headphones (as well as a wide range of other audio accessories, which are already sold in Apple Stores), it’s been speculated that the reason for the purchase is for Apple to gain control of Beats Music. With iTunes Radio struggling for subscribers as a service, Apple was said to have been keen on acquiring Beats’ own fledgling service. It has roughly 110,000 subscribers at the time of writing – not a huge figure, but certainly a nice core user base for a service in its nascent months.
The deal, even at $3bn, is still by far the largest in Apple’s history. It should also stand to make Dr. Dre the first ‘hip-hop billionaire’.
UPDATE: The deal has now formally gone through, as confirmed on Apple’s official website.
There’s not really anything new to add that we haven’t already covered, apart from one particularly unfortunate downside. If rumours are to be believed, around 200 Beats employees could be set to lost their jobs.
These employees would all be based within departments which overlap with Apple’s, such as HR and finance, and as such are deemed excess.
For now though, we wait and see just what Apple has in store for the future of Beats.
