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Apple confirms Beats purchase

Article By: ,  Financial Analyst
May 29, 2014 11:15 AM

Apple has confirmed it is moving forward with a deal to buy Beats Electronics.

News of a possible bid for Beats broke a couple of weeks ago and Apple has now announced it is buying the company in a deal worth a total of $3 billion (£1.8 billion).

This is Apple's largest acquisition ever and will give the firm access to Beats Music, a new streaming service that has become a rival to Spotify in the last few months.

Beats is still best known for its highly recognisable headphones brand, which is used by celebrities from rock stars to footballers and everyone in between.

As part of Apple's purchase of Beats Electronics, Beats co-founders Jimmy Iovine and Dr Dre are set to take new roles at Apple.

Apple boss Tim Cook said in a statement that buying Beats will enable the company to "continue to create the most innovative music products and services in the world".

It is likely that another key reason behind the purchase of Beats Electronics is Apple's desire to retain the coolness of its brand and bringing Dr Dre and Iovine on board is expected to contribute to that aim.

Investment in music

Mr Cook added: "Music is such an important part of all of our lives and holds a special place within our hearts at Apple. That's why we have kept investing in music and are bringing together these extraordinary teams."

Iovine also noted that he always believed the home of Beats Electronics would be Apple. He said: "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."

Apple's iTunes software is one of the most-used music products in the world, but the company has been struggling to retain relevance in recent years as rival firms gained ground.

The share price of the firm slipped back by 0.26 per cent on the Nasdaq yesterday (May 28th), but rebounded with a 0.09 per cent increase in after-hours trading on the US stock market.

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