News by Andrew Kameka on Wednesday May 28, 2014.
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Apple is now in the headphones business. Following weeks of rumors and leaks, Apple today confirmed reports that it plans to purchase Beats Music and Beats Electronics for $3 billion. The breakdown of the purchase includes a $2.6 billion offer and $400 million in stock that will not be payable until a later date. Beats co-founders and music industry vets Dr. Dre and Jimmy Iovine will join Apple in roles that have yet to be disclosed.
Since rumors of a Beats acquisition first emerged, it was though that the purchase was largely done in order to acquire talent for its music streaming business. Apple has seen revenue from iTunes music sales decline during the rise of streaming music, and acquiring Beats gives Apple an instant foot in the game. More importantly, it gives Apple direct access to a powerful music industry executive and a world-famous brand that's the dominant player in headphones. Apple is acquiring the entire Beats business, including its high-priced headphones and speakers products, and the young but growing Beats Music on-demand streaming service.Apple expects the deal to close in the fourth quarter of its fiscal year, pending regulatory approval.
Andrew is based in Miami, Florida.