Apple has confirmed plans to acquire Beats Electronics, the maker of a popular line of headphones and a not-so-popular streaming music service. The purchase price was approximately $2.6 billion in cash with an additional $400 million in stock options that will vest over time, making it Apple’s largest acquisition ever.
Beats co-founder Jimmy Iovine said that he had “always known in heart that Beats belonged with Apple.” In fact, the company drew inspiration from Apple’s culture and technology. Hip-hop legend Dr. Dre and Iovine will now be returning the favor as they join Apple.
Eddy Cue, the Apple SVP who oversees iTunes, said that Beats will make Apple’s music lineup “even better” by adding a subscription service to its existing Internet radio and online store offerings.
“In just five years since launch, the Beats ‘b’ has become the brand of choice in the music and sports worlds, and is the market leader in the premium headphone market,” Apple said in its announcement. “Music superstars including Lady Gaga, Lil Wayne and Nicki Minaj have designed their own customized Beats headphones and speakers. Fashion designers and street artists such as Alexander Wang, Futura and Snarkitecture have collaborated on special limited products, while renowned athletes including LeBron James, Serena Williams and Neymar use Beats as a critical part of their training and game day process. Beats has quickly become part of pop culture in the US and with the acquisition the Beats product lineup will be offered in many more countries through the Apple Online Store, Apple’s retail stores and select Apple Authorized Resellers.”
The deal, which is awaiting regulatory approval, is expected to close by the end of September.
News of this deal leaked out earlier in May. A subsequent video of Dr. Dre, posted on Facebook by Tyrese Gibson, appeared to confirm the acquisition.
Beats Music launched earlier this year to compete with Spotify, Rdio, and iTunes Radio.
Today, the service lowered its yearly pricing to $99 and extended its free trial to 14 days.