Apple readies $3bn swoop for Beats

Apple is reportedly close to agreeing a $3.2bn (£1.9bn) acquisition of Beats Electronics, which would add revenues from the firm’s premium headphones and its subscription music streaming service.

BeatsMusic-Logo-2014_460
Beats Music will launch at the end of the month (21 January.)

The deal is not yet finalized, according to the Financial Times, but the companies could make an announcement as early as next week. The Beats management team, which includes president Luke Wood, will report to Apple chief executive Tim Cook, the article adds.

The headphone maker’s multi-billion price tag is a significant increase on the $1bn (£591m) valuation it was given by private equity firm Carlyle Group last September.

Beats did not respond to requests for comment by the time this article was published.

It would be Apple’s largest acquisition to date, dwarfing the company’s $200m (£118m) purchase of social media analytics company Topsy last December.

The purchase would tighten Apple’s grip of the phone accessories market through the Beats by Dre premium headphones, while also bolstering the company’s iRadio and iTunes music products via Beats’ music streaming service.

Beats launched the Spotify-like on demand music app earlier this year, allowing fans to create playlists based on location, an activity, a person, mood and genre of music. The features could be a fillip to Apple’s iRadio service, which launched last year as a way to wrestle ad revenues from Spotify and Pandora. Notably, the app is available for Android and Windows devices and it is not clear whether Apple would maintain the relationships with other smartphone brands if the purchase were finalised.

Additionally, Beats’ guerilla marketing and celebrity-backed promotions could offer a different path for Apple as it looks to combat Samsung’s heavyweight advertising campaigns and soaring smartphone sales.

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