Market Overview

Apple Rumored To Acquire Beats Electronics For $3.2 Billion

Apple (NASDAQ: AAPL) is in talks to acquire Beats Electronics, according to a Financial Times report from Thursday afternoon.

The deal is rumored to be around $3.2 billion, which would make it Apple’s largest acquisition to date. The most notable asset Apple would be acquiring is the company’s headphone business. It would also take on Beat’s music streaming.

The Financial Times speculates Apple wants to take on the brand to freshen its image after Samsung (OTC: SSNLF) has begun to establish itself as the trendier company. Other reasons Apple may want to acquire beats include leveraging economies of scale, significantly expanding the Beats brand’s offerings, and licensing the brand.

If true, this acquisition is characteristic of a company that is unable to grow organically. Apple would not be buying technology to build better products, but rather a revenue stream and brand name.

Despite such a large acquisition (more than six percent of Apple’s market cap), the share price reaction has been relatively positive. Shares were last trading at $585.50, 0.42 percent below Thursday’s closing price, after making a low of $583.10. Reasons for the reaction, amongst positive branding and revenues, include the probability the deal will not go through and the large amount of cash the company has on hand.

Posted-In: News M&A

 

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