Apple Buys Beats for $3 Billion; Dr Dre, Jimmy Iovine Join Executive Team
After nearly three weeks of waiting and speculation, Apple has officially announced the acquisition of Beats Electronics and Beats Music in a $3 billion deal. Beats founders — Interscope-Geffen-A&M chairman Jimmy Iovine and hip-hop producer Dr Dre — will be joining Apple in executive roles not specified in the announcement. Billboard Five Things Holding Up the Apple-Beats Deal
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The Carlyle Group, which reportedly invested $500 million in Beats last September, put Beats’ valuation at more than $1 billion.
Iovine and Dr Dre, who hold majority stakes in their company, are set to make hundreds of millions from the deal. Other substantial investors in Beats have included Universal Music Group, the world’s largest music company, which looks set to make over $500 million on its 14% stake in the company (worth $420 million plus dividends and other considerations).
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“UMG’s singular relationship with Jimmy permitted his innovation to flourish,” said UMG CEO Lucian Grainge in a statement. “Together we created a once-in-a-generation opportunity that allowed Jimmy to maximize the use of his many talents.”
The deal represents Apple’s largest acquisition to date and CEO Tim Cook’s first big deal.
In late 2009, Apple acquired Lala.com, a site that offered ownership of individual web streams of songs. It eventually added a scan-and-match service, known as iTunes Match, that allows users to stream music from multiple devices via the cloud once they’ve demonstrated ownership of them, but has thus far allowed other companies to develop the subscription music market without launching a service of its own.
Beats, meanwhile, acquired subscription service MOG in 2012, and brought in former Topspin Media CEO Ian Rogers as its chief executive the following year to launch and lead the subscription service. Beats also acquired the associated company Topspin, a direct-to-fan marketing platform developer, earlier this year.
In its last earnings report, Apple reported $10.2 billion in profit on $45.6 billion in revenue for the quarter ending March 29, driven primarily by strong iPhone sales. Apple also sells Beats hardware in its Apple stores.
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