Apple buys “Beats by Dr. Dre” for $3.2 billion!

The Financial Times newspaper yesterday reported that Apple is in the final stages of negotiating a $3.2 billion acquisition of Beats Electronics, a startup behind the recently unveiled Beats Music streaming service and the maker of premium headphones and assorted audio accessories.

Dr. Dre, who co-founded Beats, has now seemingly jumped the gun on announcing the deal in a video published on Facebook, which has now been deleted because Apple – as I’m sure you know by now – is not fond of leaks…

He all but confirmed – drunkenly, it would seem – Apple’s rumored Beats buy in a video Tyrese Gibson – R&B singer-songwriter, actor and Dre’s “homie” – posted on his Facebook page.

The short clip showing Dre boasting about being “the first billionaire in hip-hop” has since been removed from Facebook.

“I’m the first billionaire in hip hop right here from the mothafucking West Cost,” he proclaims in an NSFW clip.

Here’s a YouTube version.

Take Dre’s claim with a pinch of salt as he was “drunk off of Heinekens”.

If the deal come through, Dr. Dre will take home nearly $1 billion. As Forbes points out:

Dre’s stake in Beats currently stands at somewhere around 20-25 percent. Capital gains taxes could take a bite out of his big payday, likely leaving him with a net worth in the neighborhood of $800 million.

It’s not quite enough to land on the Forbes 400, but it would easily make him hip-hop’s richest man, topping current champion Diddy by $100 million.

That Dre, 49, would all but confirm the Beats buy could be a PR move though I doubt the famous hip hop artist needs to piggy-back on Apple’s popularity – the man is an institution himself.

Beats was founded in 2006 by music producer Jimmy Iovine (pictured above) and hip-hop star Dr. Dre. Beats Audio technology can currently be found in select HTC handsets and on certain Hewlett-Packard notebooks.

Iovine also co-founded Interscope Records in the early 90′s, which later became part of the Universal Music Group. The New York Post claimed yesterday that the music mogul would be joining Apple as a special adviser to CEO Tim Cook on “creative matters.”

Last year, the music exec gave Walt Mossberg a nice history lesson on the rise and fall of the music industry, you can watch the entire AllThingsD interview here or check out highlights in the YouTube clip below.

According to the official website, Beats Electronics comprises the Beats by Dr. Dre family of premium consumer headphones, earphones and speakers as well as patented Beats Audio software technology and streaming music subscription service Beats Music.

And here’a short clip showing Steve Jobs and Dr. Dre talking about the iPod and iTunes in a video chat at Apple’s keynote almost a decade ago.

The Santa Monica, California headquartered Beats is going to pull in about $1 in revenue this year. That said, paying three times the revenue for a headphone company isn’t all that bad, according to Peter Kafka of Re/code.

Others don’t share his enthusiasm.

Jay Yarow of Business Insider, for example, cites a couple reasons why the deal “goes against the soul of Apple”.

What’s your read of the situation?

And what is Tim Cook thinking here?

Help us read his mind!

 

2 thoughts on “Apple buys “Beats by Dr. Dre” for $3.2 billion!

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