“Apple Inc. is paying slightly less than $500 million for the Beats Music streaming service, and more than $2.5 billion for Beats Electronics in its $3 billion deal, according to people familiar with the matter,” Hannah Karp, Ryan Dezember and Alistair Barr report for The Wall Street Journal. “The breakdown between the two portions of Beats Electronics LLC offers insight into Apple’s thinking for the most expensive acquisition in its history.”
“A person familiar with Beats said its 2013 sales totaled close to $1.3 billion—all from the electronics unit that sells headphones and other audio gear—and the company was profitable,” Karp, Dezember and Barr report. “Beats launched its streaming-music service in January.”
“The people familiar with the matter cautioned that the breakdown of the purchase price was largely an accounting issue, because the two Beats units are backed by different investors,” Karp, Dezember and Barr report. “Apple Chief Executive Tim Cook said in an interview Wednesday that growing Beats’ existing businesses was ‘not the reason for doing the deal.'”
“Instead, he said, the deal was about recruiting the right people for Apple, which revolutionized music consumption with the iPod and its iTunes digital-music store but has risked falling behind in newer businesses such as streaming,” Karp, Dezember and Barr report. “Apple never contacted Spotify during the process of acquiring Beats, according to two people familiar with the matter, suggesting that Apple was more interested in Beats for its brand power and star leadership than in acquiring a generic streaming service.”
Read more in the full article here.
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