Apple Inc, the makers of all things “i” is now close to acquiring Beat Electronics, said two people close to the negotiations. If the deal goes through, it would be an expensive jump into headphone gear and music streaming that would be a huge departure for the iPhone maker that is normally cash-conservative.
Both companies have been hashing the details out and the projected deal could still not take place.
Another source that is close to the situation said that Apple was looking to acquire a music service that is subscription based to complement iRadio which is ad-based and launched in 2013 in an attempt to leap into the music streaming fray that at the time had just Pandora Inc and few other startups.
Dr. Dre a famous rapper founded Beats along with Jimmy Iovine the legendary music producer.
The company is most widely known for Beats by Dr. Dre its line of trendy new headphones that compete with Sennheiser Electronics, Bose Corp and Skullcandy, Inc.
This year, Beat Electronics launched its music service that has been winning plaudits for the human music curation and slick design, versus the dry computer algorithms that most rivals determine playlists from.
However, on Thursday analysts questioned if Beats, valued at only $1 billion in its most recent round of funding last September, was worth such a hefty price of $3.2 billion.
Apple has over $130 billion of cash on hands per its March filing, but most of that is sitting abroad, while investors have called upon the business to return more of its cash on buybacks and dividends.
Apple followers have been speculating that the business upended the world’s music industry and now is the largest single seller of tunes was contemplating a service of on-demand music similar to Spotify to complement its service of iRadio and iTunes.
One analyst called the near deal puzzling. He said today companies buy other companies to gain technologies that no one has or customers that no other company has. There might be something hidden no one is aware of, said the analyst.
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