May 13, 2014

Apple and Beats Electronics reportedly in talks of potential acquisition

It was reported recently that Apple and Beats Electronics have been talking about a potential acquisition deal in which Apple would acquire the headphone manufacturer for $3.2 billion.

Beats, a company known mostly for its popular headphones, also has a streaming subscription music service, Beats Music, and makes other audio devices including speakers and accessories. The company was founded by music producer/rapper Dr. Dre and Jimmy Iovine, chairman of Interscope records. According to the Beats website, the company owned 51 percent of the premium headphone market in 2012.

Through this acquisition strategy, Apple could be looking to expand its wearable technologies. Because music is a big part of Apple's business, acquiring Beats could help strengthen this area of Apple's business even further. However, it was noted that digital download music sales have been on the decline recently, and it is speculated by some that the possible acquisition of Beats might be a strategic move by Apple to boost its presence in this area. 

As Business Insider notes, Beats had a valuation of $1 billion last year, and the purchase by Apple would mean "Beats has tripled its value in just a few months." Apple is not known for making a lot of acquisitions, and this would be a major one for the company. Some of Apple's previous acquisitions have included personal assistant software Siri, music production software Emagic and media management system Proximity.

It is anticipated that the deal could be officially announced later this week, but whether or not this potentially major acquisition will go through remains to be seen. Additionally, Dr. Dre and Jimmy Iovine would join Apple as part of the deal, the Wall Street Journal reported.