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Beats buyback came when HTC didn't meet obligations

updated 07:33 pm EDT, Mon July 23, 2012

HTC's own upheaval caused phone maker to miss commitments

Following yesterday's news of Beats Audio buying back shares from HTC, sources today claim that the buyback occurred due to HTC not fulfilling certain of its contractual obligations. Persons familiar with the matter tell CNet that HTC's own troubles kept the company from meeting its financial commitments to Beats, leading Beats to buy back half of the shares it had sold to the Taiwanese phone maker.

Last August, Beats sold 50.1 percent of its shares to HTC in a deal that apparently included some degree of financial support or payment from the HTC. The $300 million purchase gave HTC a controlling share in the audio accessory maker, as well as exclusive access to Beats technology for the mobile market.

Over the past year, though, HTC has undergone a management shakeup. The company has also seen its market share shrinking in the face of competition from larger players, and its shares have suffered consequently.

Following the new buyback, Beats will hold 75 percent of its own shares, and HTC will hold 25 percent. Beats representatives have said that the deal will provide the company with operational flexibility for global expansion. According to some analyses, Beats holds 28.7 percent of the overall headphone category, with 54 percent of market share among headphones costing $100 or more.



By Electronista Staff
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