Apple Buys Beats for $3.2 billion

Apple has officially purchased audio equipment and service company Beats for $3.2 billion.

As part of the deal, streaming service Beats Music would also be a part of the company's iTunes division. Both were competitors until now, but it would be interesting to see if Apple is going to merge them together.

The Beats Audio management team will now report directly to Apple’s CEO Tim Cook.

Beats headphones have quickly become the most visible brand across multiple medias. Especially the recent music videos have really gotten heavy on the “b” logo. But what does it mean for the company when one of the most creative corporations decides to spend $3.2 Billion on an audio equipment manufacturer who is currently valued at just $1 Billion.

Beats Electronics, LLC is an American producer of audio products and equipment headquartered in Santa Monica, California. The company was founded by rapper and hip-hop producer Andre "Dr. Dre" Young and Interscope-Geffen-A&M Records chairman Jimmy Iovine. For a period, the company was majority-owned by Taiwanese smartphone maker HTC — the company reduced its stake to 25% in 2012, and sold its remaining stake back in 2013; concurrently, Carlyle Group replaced HTC as a minority shareholder alongside Dr. Dre and Iovine.

“Dre’s stake in Beats currently stands at somewhere around 20-25%; we valued the company at $2 billion in our latest round of estimates.

A sale for $3.2 billion would nearly double the value of Dre’s holdings, though capital gains taxes could take a bite out of his big payday, likely leaving him with a net worth in the neighborhood of $800 million. It’s not quite enough to land on the Forbes 400, but it would easily make him hip-hop’s richest man, topping current champion Diddy by $100 million.”

Here's the video they put on youtube...