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Report: Apple's alleged Beats buyout deal fragile, could disintegrate

updated 10:56 am EDT, Fri May 23, 2014

Source says Apple after talent, cultural cachet still happening, but was close to disintegrating

Apple is indeed still planning to buy Beats Electronics, according to unnamed sources, but the deal has allegedly almost fallen apart several times. The person claims that there is a "70 percent certainty" the buyout will happen. Notably, the person claims that Apple isn't after Beats Music, speakers, or headphones, but rather talent and cultural cachet. "[Apple] wants Jimmy [Iovine] and they want [Dr.] Dre," the person says. "[Iovine]'s got fashion and culture completely locked up."

In addition to running Beats, Iovine has a long-running history as a label chief, record producer and industry executive, and also has a reputation for being aggressive in media negotiations. Together with Dr. Dre -- perhaps the best-known name in rap -- Apple may feel it can buy its way into further youth appeal, despite already being by far the most popular youth brand. Beyond bringing the Beats brand, Iovine's negotiation skills may allow Apple to score key music deals for iTunes.

The source suggests that picking up Iovine and Dre may also be consistent with Apple's recent hirings of uniquely specialized and culturally-tuned people from other industries, like Burberry CEO Angela Ahrendts, Leica engineer Ari Partinen, Nike's Ben Shaffer, and Yves St. Laurent CEO Paul Deneve.

Rumors have circulated that Samsung tried to buy Beats, but those talks are said to have broken up "earlier in the year."



By Electronista Staff
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  1. tehwoz

    Fresh-Faced Recruit

    Joined: 12-19-13

    If Apple buys Beats (for that sort of price) ... I am selling out of Apple ... after being a stockholder for 25 years. This is the behaviour you see from companies that don't have a clue anymore ... with no idea about about value nor the way forward. It smacks of the obscene and idiotic prices paid by 'has-been' firms like Microsoft and Yahoo for startups that ultimately essentially had no real value ... and clearly marked the demise of those behemoths. Let us all hope Apple does not go down this idiotic path.

  1. Vulpine

    Fresh-Faced Recruit

    Joined: 11-18-11

    I might agree with Iovine, but Dr. Dre? Hardly.

  1. DiabloConQueso

    Fresh-Faced Recruit

    Joined: 06-11-08

    Apple has, give or take, $150 billion in cash.

    CASH.

    This deal represents about 2% of their cash-on-hand (maybe a tad higher percentage after the stock buy-back happens).

    You're abandoning a 25 year investment because the company is spending 2% of their cash (Apple actually has a lot more "money" than $150 billion, but just a mere $150 billion of that is cold, hard, cash) on the acquisition of a company that holds a powerful catalog and pre-negotiated contracts with record labels, along with one of the most prolific and well-known music producers around, and throwing in a headphone hardware lineup that commands 30% to 40% or more of the headphones market?

    Not to mention the stock split that's about to happen, which, by all predictions, is going to cause the stock to raise higher as more entry- and mid-level traders are able to afford the initial cost of entry ($600/share to ~$85/share is a potential game-changer, and you know it, since you were around a few years ago when they were sitting there, and watched them climb to $600).

    Welp, good luck with that.

    "Apple is about to spend BILLIONS to acquiring a questionable company and there are other companies that spent BILLIONS on purchasing questionable companies and it was a BAD idea" -- if you look at it in over-simplified, falsely-correlated terms like that, then yes, I can see why you'd want to run for the hills... but over-simplifying it to that extent completely changes the meaning and scope and scale of what's really happening here.

    If you judge my spending habits and future financial stability and solvency by what, specifically, I purchase with $2 out of the $100 I have in my wallet, then I believe the sample size you have chosen is statistically insignificant.

  1. shawnde

    Fresh-Faced Recruit

    Joined: 04-01-08

    @DiabloConQueso

    I don't think it matters what percentage ... it's about the mindset. I agree with tehwoz, that this would be a stupid move .... this would be in the same realm as Microsoft buying Softimage (only to destroy Softimage afterwards and don't do anything with them) .... like many of Yahoo's and Microsoft's acquisitions ... Apple is not a chump in music .... they single-handedly CREATED the market for people like Beats to tap into .... it would be ridiculous for Apple to buy Beats for their negotiation skills ... Apple has done pretty good in negotiations with the labels and musicians, and I don't think Beats is gonna help in this regard. And beside that, Beats has NOTHING else .... a bunch of second-rate headphones. Apple can re-engineer all of Beats product portfolio in a week !!!! This is not the 1990's .... they have a lot of resources and smart people. In my mind, this is a total BS acquisition, which is being shopped around and pushed by the M&A bankers on Wall Street for a short-term profit.

  1. mozart11

    Junior Member

    Joined: 08-20-00

    Based solely on the Dr. Dre video - if Cook goes through with the deal - it's all on Cook then.

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