Apple and Dr Dre in billion-dollar Beats buyout talks

Apple is close to buying the Dr Dre-founded headphone maker Beats Electronics for $3.2bn, sources with knowledge of the deal have said.

Speaking to Reuters, the sources claim both companies are hashing out details, but added that the acquisition is not yet final, and could fall apart unless both parties can come to an agreement.

A video uploaded to Facebook by actor Tyrese Gibson appears to confirm the deal, with Dre appearing and calling himself "the first billionaire in hip-hop." The video, which contains strong language, can be seen here.

Beats Electronics is best known for producing the Beats by Dr Dre range of fashionable headphones, attracting partnership with artists including Lady Gaga and Justin Bieber. The headphones are loved by consumers, but criticised by audiophiles for being overpriced and producing too much bass.

If Apple were to buy Beats, then future iPhones and iPods may come with improved headphones, and upcoming devices may include Beats amplification software, as seen on some HTC smartphones when that company held a stake in Beats.

The company was valued at $1bn during its last round of funding, and for a company so conservative with its money, spending $3.2bn would be an unusual move for Apple should the deal go ahead.

"This is really puzzling... they must have something hidden under the hood"

Another source told Reuters that Apple was in the market for a subscription-based music service to go alongside its iRadio ad-based offering. This year, Beats launched its own music service that won praise for its design and the way playlists are created by humans, rather than those of rivals like Pandora, which are produced by algorithms.

The proposed deal has confused analysts, with James McQuivey of Forrester telling Reuters: “This is really puzzling. You buy companies today to get technologies that no one else... or customers that no one has. [Beats] must have something hidden... under the hood.”

Source: Reuters



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