Apple has agreed to buy Beats Electronics for US$3 billion (NZ$3.5b) , its biggest-ever acquisition, nabbing a popular line of headphones and a nascent subscription music-streaming service as the iPhone maker seeks to rev up growth.
Beats founders Dr. Dre and music-industry executive Jimmy Iovine, will join Apple, according to a statement from the companies Wednesday (local time). The purchase price is US$2.6b, with another US$400 million that will vest over time. The acquisition is projected to close in the fiscal fourth quarter.
The deal signifies that Apple Chief Executive Officer Tim Cook is willing to use the company's US$150.6b in cash more aggressively, a departure from predecessor Steve Jobs's playbook of acquiring smaller companies to bring in technology and talent. As sales of digital media downloads fall, buying Beats gives Apple a foothold in internet-based streaming, where Google's YouTube, Spotify and Pandora Media dominate.
"Music is such an important part of all of our lives and holds a special place within our hearts at Apple," said Cook in the statement.
The deal indicates how the CEO, who is facing pressure to jump-start Apple's sales amid cooling iPhone and iPad sales, is shifting to acquire growth. Even as Google and Facebook Inc. have spent billions on acquisitions, Apple previously avoided tie-ups of this size. Its biggest past purchase was the US$400m deal for NeXT in 1997, which brought Jobs back to Apple.
