Apple officially announces Beats deal

Apple has officially announced its acquisition of Beats Music and Beats Electronics for $3.25 billion.

The move, widely expected this week, resulted in a purchase price of roughly USD$2.6 billion and approximately USD$400 million that will vest over time.

Jimmy Iovine (Chairman of Interscope Geffen A&M Records) and Dr. Dre – co-founders of the subscription streaming music service and headphones, speakers and audio software manufacturers – will join Apple. Iovine has partnered with Apple and iTunes for more than a decade and even modeling the idea of Beats from Apple’s ethos.

“I’ve always known in my heart that Beats belonged with Apple,” said Iovine. “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.”

Beats’ products (consumer headphones, earphones, and speakers as well as patented Beats Audio software technology) will be offered through the Apple Online Store, Apple’s retail stores and select Apple Authorised Resellers.

“Music is such an important part of all of our lives and holds a special place within our hearts at Apple,” said Tim Cook, Apple’s CEO. “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.”

Eddy Cue, Apple’s senior vice president of Internet Software and Services added: “Music is such an important part of Apple’s DNA and always will be. 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.”

Apple expects the transaction to close in fiscal Q4, which ends in late September.

In light of Iovine joining Apple, Universal Music Group (UMG) has promoted John Jannick as his successor as Chairman and CEO of Interscope Geffen A&M (IGA). He will take over when Apple closes the transaction with Beats Electronics.

Jannick and UMG Chairman/CEO Lucian Grainge have praised Iovine’s work with messages sent to their staff.

Jannick’s tribute, which was sent to his staff and posted on Billboard, partly reads: “He has created an incredible company at Interscope Geffen A&M, and I’ve had the privilege of working with, and learning from, him since I started here in 2012. He has been an inspiration, and I cannot thank him enough for the opportunity he has given me.

“[…] Everyone should be proud of what Jimmy’s accomplished today, and of everything we continue to do with the company he founded here at Interscope.”

Lucian Grainge’s message partly reads: “History teaches us that great entrepreneurs are few and far between. 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 […] 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.”