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Published: Saturday, 5/10/2014 - Updated: 7 months ago

Report: Apple to pay $3.2B for maker of headphones

Beats Electronics founder posts of deal on Facebook

BLADE NEWS SERVICES
Dr. Dre Dr. Dre
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SAN FRANCISCO — Apple is orchestrating a $3.2 billion acquisition of Beats Electronics, the headphone maker and music streaming distributor founded by hip-hop star Dr. Dre and music industry impresario Jimmy Iovine, according to a report in the Financial Times.

Citing people familiar with the negotiations, the newspaper said Apple could announce the deal as early as next week. The paper warned the talks still could collapse if the two sides don’t agree on details.

Both Apple Inc. and Beats Electronics LLC declined to comment to the Associated Press.

But Dr. Dre may have confirmed the rumors himself on Facebook. The hip-hop star posted a video that features him alongside R&B singer and actor Tyrese Gibson, in which the two claim Dr. Dre is now the first billionaire rapper.

“Billionaire boys’ club for real, homie,” Mr. Gibson said in the video. “The Forbes list just changed.”

“The first billionaire in hip hop,” Dr. Dre said later on in the video, which included a caption that said “Dr Dre ON THE night his deal went public that he did with Apple 3.2 BILLION!!!!”

The two also posted a selfie photo with the caption “Apple = Beats 3.2 BILLION!!!!!! The night everything changed!!!!” The photo and video were soon taken down, but not before others on the Internet could make copies.

The potential acquisition would add Beats Electronics’ popular line of headphones and music streaming service to an Apple lineup that includes digital music players and the iTunes store, the world’s top music retailer.

If the deal is completed, it would be by far the largest in Apple Inc.’s 38-year history.

The Cupertino, Calif., company has traditionally seen little need to buy technology from other companies, reflecting Apple’s confidence in its ability to turn its own ideas into revolutionary products such as the Mac computer, the iPod, the iPhone, and the iPad.

But Apple hasn’t released a breakthrough product since its former CEO and chief visionary, Steve Jobs, died in October, 2011. The innovative void has increased the pressure on Mr. Jobs’ hand-picked successor, Tim Cook, to prove he is capable of sustaining the success and growth that turned Apple into the world’s most valuable company and a beloved brand.

Mr. Cook has shown a willingness to spend more of Apple’s money than Mr. Jobs ever did. Among other things, Mr. Cook began paying Apple stockholders a quarterly dividend and has progressively committed more money to buying back the company’s shares.

Apple’s pursuit of Beats Electronics is the latest indication that the company is having trouble generating growth on its own. Apple already sells Beats Electronics gear in its stores, giving the company insights into how much the trendy headphones and other audio equipment appeal to its customers.

Beats Electronics LLC was founded in Santa Monica, California in 2008 by Dr. Dre and Mr. Iovine. Its headphones were manufactured by Monster Cable until the two companies parted ways in 2012. The headphones have become a bit of a status symbol, worn by celebrities as well as audiophiles.

In 2012, Beats bought streaming music service MOG, which it transformed and relaunched as Beats Music earlier this year.



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