It's official. Apple on Wednesday announced its much-anticipated acquisition of Beats Electronics for $3 billion, the biggest in a series of recent buys for the tech giant.
Despite the high price, Apple (NASDAQ:AAPL) will not integrate Beats into its own business, at least not yet, but will rather run the company separately and maintain both its premium headphone product line, Beats by Dr. Dre, and streaming music service, Beats Music, as they are currently.
“Music is such an important part of all of our lives and holds a special place within our hearts at Apple,” said Apple CEO Tim Cook in the official press release. “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.”
Beats Electronics co-founders Dr. Dre and Jimmy Iovine will become executives working directly under Eddy Cue, Apple’s executive in charge of Internet services, reports the New York Times. Iovine and Dr. Dre are the most recent high-profile names to be added to Apple’s roster, following the likes of Angela Ahrendts, formerly of Burberry, and Paul Deneve, of Yves Saint Laurent.
“I’ve always known in my heart that Beats belonged with Apple,” said 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.”
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The deal went for close to what the Financial Times originally reported in early May. Apple is paying a total of $3 billion, which includes a single purchase price of $2.6 billion and $400 million that will vest over time.
The deal still needs regulatory approval, but Apple does not expect any problems and sees the deal finalizing in its fourth quarter. Apple’s fiscal year runs October through September, so the fourth quarter is when Apple is expected to debut the iPhone 6, iPad Air 2 and other devices.
Beats Electronics is best known for high-end, bass-heavy headphones synonymous with hip-hop and pop culture. The company announced a subscription streaming music service earlier this year.
This is the first acquisition of this size for Apple, while its competitors Google and Facebook are long known for multibillion-dollar deals.