HITS Daily Double
“I’ve always known in my heart that Beats belonged with Apple."
—--Jimmy Iovine


Apple Announces $3 Billion Acquisition of Beats; Jimmy, Dre Join Cook's Co.

Well, it’s official.

Apple has announced its $3 billion acquisition of Beats, and that Jimmy Iovine and Dr. Dre will join the company in as-yet undefined posts. The deal will close in fiscal Q4 (September), subject to regulatory approval.

The purchase price of the acquisition is $2.6 billion, with an additional $400 million “that will vest over time,” according to the release. The deal brings both Beats Electronics and the Beats Music streaming service under Cupertino’s umbrella. The announcement was made after the market closed.

Expect some kind of formal introduction of Jimmy and Dre at Apple's Worldwide Developers Conference, which kicks off on 6/2.

John Janick will succeed Iovine as Chairman/CEO of IGA; see our story about that here.

In an employee memo extolling the Beats acquisition, Apple CEO Tim Cook described Beats Music as "the first subscription music service to really get it right." The memo notes that the Beats Music team will report to head of Software & Services Eddy Cue, while headphones, speakers and other hardware will be under auspices of SVP Worldwide Marketing Phil Schiller. The addition of Beats will make our incredible iTunes lineup even better, extending the emotional connection our customers have with music."

Beats gear will be offered in Apple retail and online stores as part of the deal, but the Beats team’s contribution to the next wave of Apple tech is clearly at the heart of the pact.

“I’ve always known in my heart that Beats belonged with Apple,” Iovine declared. “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,songwriters and the music industry is something special.”

"History teaches us that great entrepreneurs are few and far between," commented UMG chief Lucian Grainge. "Jimmy Iovine is one of that small number of entrepreneurs who, by doing so much so well in so many different arenas, have left their indelible mark. He founded, and for more than 20 years has led, Interscope, a label that has consistently been in the forefront of the music business, both artistically and commercially. He has put in place, developed and mentored there a world-class management team. At the same time, Jimmy co-founded Beats, a wildly successful, cutting-edge company that revolutionized how consumers listen to music, and from there went on to build a platform that is advancing the evolution of the access model for the entire music industry. 

"Based on mutual trust and respect," added Grainge, "UMG’s singular relationship with Jimmy permitted his innovation to flourish in all these ways. Together we created a once-in-a-generation opportunity that allowed Jimmy to maximize the use of his many talents. In recent years, as Jimmy partnered with John Janick, one of the industry’s most talented and promising young executives, Interscope’s results have skyrocketed. We thank Jimmy for both the incomparable leadership he’s provided to Interscope and UMG and for the highly beneficial partnership UMG has enjoyed with Beats. We wish Jimmy the very best and look forward to enhancing our partnerships with Apple and Beats for many years to come."

UMG will make an estimated $400m in the deal, according to insiders.

“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. “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.”

"Music is such an important part of Apple's DNA and always will be," said EVP of Internet Software and Services Eddy Cue. "The addition of Beats will make our music lineup even better, from free streaming with iTunes Radio to a world-class subscription service in Beats, and of course buying music from the iTunes store as customers have loved to do for years."

Iovine and Dre co-founded Beats in 2008, intending to provide a better listening experience to go with Apple’s iPod and iTunes architecture. The company quickly became a major lifestyle brand that brought urban music culture, sports and fashion together.

Stand by for lots of updates.