Apple Close to Buying Dr Dre’s Beats Headphones Company for $3.2Bn

Apple is reportedly planning to conduct its largest acquisition ever.

Deal for Beats' music streaming service and headphones arm would be the largest one for the Californian company. Photo: Daniel Urbina/Flickr

Deal for Beats’ music streaming service and headphones arm would be the largest one for the Californian company. Photo: Daniel Urbina/Flickr

iPod and iPhone producer is currently in talks with headphone maker Beats Electronics over a $3.2bn deal that would rank as Apple’s largest ever, recent reports claim.

An upcoming acquisition, which would see Apple snap up Beats’ music streaming service and audio equipment arm, is predicted to be announced as soon as next week, the Financial Times claimed.

“Buying Beats, which was founded by music producer Jimmy Iovine and rapper Dr Dre in 2008, would also mark a significant shift in strategy by Apple chief executive Tim Cook,” The Telegraph says.

His predecessor, late Steve Jobs, seriously reformed the whole music industry when he released iTunes and the iPod a decade ago. However, these have since waned in popularity and the Californian tech company could turn to large acquisitions to reverse the trend.

Acquiring one of the leading music streaming services would provide the giant, which runs the iTunes Radio service, with extra firepower in its fight with rivals Spotify and Pandora.

Beats Music is a paid-for subscription service which is quite similar to world’s know Spotify, so would allow Apple to continue operating iTunes Radio, which is free.

Founded by famous rapper Dr. Dre and music producer Jimmy Iovine, Beats Electronics specializes in producing goods under the brand “Beats by Dr. Dre” and competes with headphones made by Skullcandy Inc, Sennheiser Electronic and Bose Corp.

“This is really puzzling,” said Forrester analyst James McQuivey. “You buy companies today to get technologies that no one else … or customers that no one has.”

“They must have something hidden … under the hood,” he added.

Meanwhile, the Cupertino-based tech giant is also predicted to team up its own headphones business with Beats’ high-end range. Recent data showed that Beats controls 27pc of the $1.8bn headphone market and 57pc of the market for “premium” versions, despite its products selling for hundreds of pounds each. It also reaches consumers through partnerships with Chrysler, Hewlett Packard and HTC.

“A multi-billion-dollar deal would dwarf the $404m Apple spent in 1996 to buy computer company NeXT, which ranks as its biggest to date. It would also be a substantial increase to the $1bn Beats was valued at just eight months ago, when asset management firm Carlyle Group took a minority stake for $500m,” The Telegraph explains.

Earlier this year Apple CEO Tim Cook said that Apple, which is sitting on a $133bn cash pile, was not against agreeing deals for large sums of money.

“We have no problem spending 10 figures for the right company, for the right fit that’s in the best interest of Apple in the long-term. None. Zero,” he said.

In two of the largest deals this year, Facebook paid $19 billion for WhatsApp and its half-billion users, and it paid $2 billion for Oculus VR and its cutting-edge virtual reality headset.

Apple declined to comment on the report. Beats Electronics was not available for comment on the news.

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