Beats Electronics and Beats Music cofounders Jimmy Iovine and Dr Dre are set to join Apple as full-time employees, with the tech giant confirming it is buying the two companies for $US3 billion ($A3.2b).
The deal which SmartCompany first reported on earlier this month will see Apple take over subscription streaming music service Beats Music, as well as headphone and speaker-maker Beats Electronics, which markets high-end headphones under the “Beats by Dr Dre” brand.
Under the deal, the tech giant will pay the record executive and the Straight Outta Compton rapper $US2.6 billion upfront for the two companies, along with a further $US400 million that will vest over time.
Beats was established in 2008, one year after the launch of Apple’s original iPhone, with the company claiming product endorsements from Lady Gaga, Lil Wayne and Nicki Minaj as well as athletes LeBron James, Serena Williams and Neymar.
During a Q&A session with Re/Code, chief executive Tim Cook said bringing in “guys with very rare skills” who “really get music deeply” was a key reason for the deal.
“We get a subscription music service that we believe is the first subscription service that really got it right. They had the insight early on to know how important human curation is. That technology by itself wasn’t enough — that it was the marriage of the two that would really be great and produce a feeling in people that we want to produce.”
In a statement, Apple told investors it hopes to close the deal by the fiscal fourth quarter, subject to regulatory approval.
The deal comes ahead of Apple’s World Wide Developer Conference, which begins next week on June 2.