Apple’s acquisition of Beats has been a very popular news item for quite some time. On 8th May Financial Times announced Apple’s acquisition of Jimmy Iovine and Dr Dre’s Beats Electronics for an astonishing price of $3.2 billion. Though the deal was expected to get closed by 12th May, no progress seems to have been made so far. Again, yesterday there was news about acquisition happening soon, probably by next week. Billboard has compiled a list of five different reasons which are possibly delaying the deal.
Though their has been no official communication from either of the companies, the video featuring Dr. Dre and Tyrese Gibson sort of confirming the deal ‘freaked out’ Apple’s executives. According to Billboard:
People often forget that despite Apple being this company that makes sexy products, with sexy profit margins, and sexy retail outlets…it is not in fact a very sexy company. It is a conservative company, particularly without the leadership of its guiding light Steve Jobs who would shake things up massively on a daily basis. This is not the kind of thing Apple is used to.
Another reason Billboard states is — the deal seems to be slightly complicated, as this would be the biggest deal Apple and CEO Tim Cook have ever done. However, Apple, being the world’s largest tech company, leader of innovation and with enormous cash in its reserves, might find $3.2 billion acquisition of a five-year old brand-heavy consumer electronics manufacturer fairly straight forward.
Billboard cites that probably Apple wouldn’t want this news to break in the market so early. Apple doesn’t want the market to speculate what it is getting for $3.2 billion. The next big question is where will Apple fit in Jimmy Iovine and Dr Dre. Will it be the executive roles or permanent consultants? Going by Steve Jobs’ biographer Walter Isaacson they might be heading the Content.
Finally, it’s the valuation for Beats Music that’s delaying the deal. Apple is more interested in Beats Music than the headphones. Beats have around 200,000 subscribers and that seems to be the most probable reason why Apple is interested in Beats. Apple plans to keep both iTunes and Beats Music as a separate entity.