There you have it – two of the world’s largest audio/media conglomerates have joined forces in this unprecedented merger. The buyout will reported be worth a total of $3 billion: $2.6bn in cash and $400m in equity for Beats Music.

In a stunning move, Apple has actually decided to keep the Beats brand. If you have been following Apple at all, you would find this odd as its own personal brand has been so important in the advancement of their products. However, it is likely that by keeping the Beats by Dre brand, Apple will add a new factor of “cool” to the dwindling company.

Apple “became one of the world’s largest technology companies by creating huge, new consumer electronics categories with the iPhone and iPad. But it hasn’t introduced a breakthrough product since co-founder Steve Jobs died in 2011.” However, with the huge surge in streaming services, Apple’s own iTunes Radio has been thrown to the wayside by competitors Pandora and Spotify. With this acquisition, Apple will be gaining Beats’ own streaming service, which purportedly boasts 250,000 paid subscribers.

beats headphones - logo blank apple

“Music is such an important part of all of our lives and holds a special place within our hearts at Apple,” said Tim Cook, Apple’s CEO. “That’s why we have kept investing in music and are bringing together these extraordinary teams so we can continue to create the most innovative music products and services in the world.”

The acquisition was first brought up nearly two months ago in a meeting between the two companies. Co-founder of Beats Jimmy Iovine, who had been working closely with Apple for 11 years on Apple’s music strategy, says he was in shock at the news. As a result of the acquisition, Iovine “said he will leave his post as chairman of Interscope Records and will work full-time at Apple. Dr. Dre said he will continue to produce music, but do ‘as much as it takes’ for Apple.”

“I’ve always known in my heart that Beats belonged with Apple,” said Jimmy Iovine. “The idea when we started the company was inspired by Apple’s unmatched ability to marry culture and technology. Apple’s deep commitment to music fans, artists, songwriters and the music industry is something special.”

However, consumers are likely the ones to find issues with the acquisitions. Apple products are known to be fairly pricey and the bottom-line could mean more expensive gear. This is all speculative, of course.

Subject to regulatory approvals, Apple expects the transaction to close in fiscal Q4.



Sources: Apple WSJ