The rumors have been confirmed that Apple is buying Beats Electronics and Beats Music for a cool $3 billion.
The Financial Times published a report on Thursday, May 8 about the possible deal, which sent tech websites and media outlets around the world into a frenzy. Some questioned the possible motive behind Apple’s interest in Beats. And the New York Times even cited anonymous sources who said the negotiations between the companies could fall apart. But Apple announced on Wednesday, May 28 that an agreement has been reached in which Apple is acquiring both companies at a purchase price of approximately $2.6 billion and approximately $400 million that will vest over time, for a total of $3 billion.
Apple’s CEO, Tim Cook, said in a press release,
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.
In addition to Beats Electronics‘ popular (and, dare I say, overpriced?) headphones, the company also offers speakers and audio software. But many suspect Apple’s main interest in this acquisition is Beats Music – the company’s new streaming music service that was introduced in January as a Spotify and Pandora competitor.
As part of the acquisition, Beats co-founders Jimmy Iovine and Dr. Dre will join Apple as full-time employees. According to re/code, Beats Music CEO Ian Rogers will now report to Apple’s Eddy Cue, the executive who runs the company’s media business and cloud services. And re/code‘s Walt Mossberg speculates that these individuals are of major interest to Apple in this deal. He speculates that Apple is interested in “injecting creative talent into the company.” He continues, “I know Jimmy and Ian pretty well, and I think the more creative talent they can get in there – given their history and what people look to them for – they’ll be not only in music but in other areas like television and video.”
Commenting on the deal, Iovine stated, “I’ve always known in my heart that Beats belonged with Apple . . . The idea when we started the company was inspired by Apple’s unmatched ability to marry culture and technology. Apple’s deep commitment to music fans, artists, songwriters and the music industry is something special.”
This deal marks Apple’s largest acquisition to date by far. How do you like them apples?