It's Official: Apple Is Buying Beats for $3 Billion

A blog about business and economics.
May 28 2014 11:52 AM

It's Official: Apple Is Buying Beats for $3 Billion

159301536-founder-of-beats-electronics-dr-dre-arrives-at-the
A slight change in the Beats deal price could thwart Dr. Dre's bid to become hip-hop's wealthiest man.

Photo by Isaac Brekken/Getty Images for Beats by Dre

Update, May 28, 4:45 p.m.: Apple is officially buying Beats Electronics for $3 billion—shelling out $2.6 billion in cash and $400 million in equity for the music-streaming service and iconic headphones. Apple will continue to use the Beats brand and bring co-founders Dr. Dre and Jimmy Iovine aboard at the company's electronics and music-streaming divisions. The New York Times reports that Apple CEO Tim Cook said the deal was a "no-brainer." "These guys are really unique," he told the Times. "It's like finding the precise grain of sand on the beach. They're rare and very hard to find." Apple expects the transaction to close in the fourth quarter of the fiscal year.

Apple is expected to announce its much-hyped deal with Beats Electronics this week, though at a slightly lower price. The New York Post reports that Apple is cutting the cost of the deal to $3 billion from the previously expected $3.2 billion. The Post suggests that a leaked report that pegged Beats Music's March subscriber count to just 111,000 may have led to a reduced valuation for the firm, especially compared with the 10 million paying subscribers Spotify reported for the same period.

Advertisement

If the deal ends up going through for $3 billion, the $200 million adjustment will only amount to a 6 percent reduction in cost. But that could be enough to undo Dr. Dre's ambitious dream (and premature celebration) of becoming hip-hop's first billionaire. Dre is thought to hold around a 25 percent stake in Beats. Forbes estimated earlier this month that a $3.2 billion deal could boost his net worth to some $800 million after capital gains taxes were accounted for. That wouldn't quite catapult Dre into the 10-figure club, but it would be enough to overtake Sean "Diddy" Combs' estimated $700 million fortune and make him hip-hop's wealthiest man. A $3 billion deal, on the other hand, could make the hip-hop wealth race a closer call.

Alison Griswold is a Slate staff writer covering business and economics.

 

TODAY IN SLATE

The Juice

Ford’s Big Gamble

It’s completely transforming America’s best-selling vehicle.

Should the United States Grant Asylum to Victims of Domestic Violence?

The Apple Watch Will Make Everyone Around You Just a Little Worse Off

This Was the First Object Ever Designed

Don’t Expect Adrian Peterson to Go to Prison

In much of America, beating your kids is perfectly legal. 

Moneybox

How the Apple Watch Will Annoy Us

A glowing screen attached to someone else’s wrist is shinier than all but the blingiest jewels.

Music

A Little Bit Softer Now, a Little Bit Softer Now …

The sad, gradual decline of the fade-out in popular music.

Is Everyone Going to Declare Independence if Scotland Does It? 

I Tried to Write an Honest Profile of One of Bollywood’s Biggest Stars. It Didn’t Go Well.

Trending News Channel
Sept. 12 2014 11:26 AM Identical Twins Aren’t Really Identical
  News & Politics
Politics
Sept. 12 2014 7:24 PM Come and Take It Libertarians fight for people whose property was seized by the police.
  Business
Moneybox
Sept. 12 2014 5:54 PM Olive Garden Has Been Committing a Culinary Crime Against Humanity
  Life
Outward
Sept. 12 2014 3:32 PM Yes, Those Straight Guys Who Wed for Rugby Tickets Are Mocking Marriage. What’s New?
  Double X
The XX Factor
Sept. 12 2014 4:05 PM Life as an NFL Wife: “He's the Star. Keep Him Happy.”
  Slate Plus
Behind the Scenes
Sept. 12 2014 5:55 PM “Do You Know What Porn Is?” Conversations with Dahlia Lithwick’s 11-year-old son.
  Arts
Brow Beat
Sept. 14 2014 7:10 PM Watch Michael Winslow Perform Every Part of “Whole Lotta Love” With Just His Voice
  Technology
Future Tense
Sept. 12 2014 3:53 PM We Need to Pass Legislation on Artificial Intelligence Early and Often
  Health & Science
New Scientist
Sept. 14 2014 8:38 AM Scientific Misconduct Should Be a Crime It’s as bad as fraud or theft, only potentially more dangerous.
  Sports
Sports Nut
Sept. 12 2014 4:36 PM “There’s No Tolerance for That” Pete Carroll and Jim Harbaugh say they don’t abide domestic abuse. So why do the Seahawks and 49ers have a combined six players accused of violence against women?