Rapper Dr. Dre and recording impresario Jimmy Iovine have joined Apple after the completed US$3 billion (€2.2 billion) acquistion of Beats Electronics. The announcement comes nearly three weeks after deal negotiations were leaked to the media.
At €2.2 billion, the deal for the headphone and streaming music company is the most expensive acquisition in Apple's 38-year history. It includes US$2.6 billion (€1.91 bn) in cash and US$400 million (€294 mn) in Apple stock that will vest over an unspecified time period.
Apple broke into the music streaming business last year with the launch of iTunes Radio, but with US$1.1 billion in revenue last year, Beats should boost the tech giant's earnings once the new fiscal year begins in October.
"Music is such an important part of all of our lives and holds a special place within our hearts at Apple" Apple CEO Tim Cook said in a media 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".
Iovine, a co-founder of Interscope Records, said "I've always known in my heart that Beats belonged with Apple".
"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".
The growing popularity of music streaming services such as Pandora and Spotify has been reducing sales of songs and albums, a business that iTunes has dominated for the past decade.
US sales of downloaded songs slipped 1% last year to US$2.8 billion (€2.05 bn) while streaming music revenue surged 39% to US$1.4 billion (€1.02 bn), according to the Recording Industry Association of America.
Mr. Cook says Beats Music has more than 250,000 subscribers.
Beats also commands 62% of the US$1 billion US market for headphones priced above US$100 (€73), according to market research firm NPD Group.
The acquisition will see both Dre (49) and Iovine (61) become executives in Apple's music divisions, though Mr. Cook said their roles have not yet been determined.
Dr. Dre, whose real name is Andre Young, started his career in influential rap group NWA before co-founding Death Row Records and going on to produce some of the biggest names in hip hop.
Newstalk's Business Editor Ian Guider says Apple will gain more than just the Beats name.
