From left: Jimmy Iovine, Tim Cook, Dr Dre and Eddy Cue 
 
 ©Getty Time for a move: Apple chief Tim Cook’s swoop for Beats marks a radical shift. ‘It shows he is willing to go against Steve Jobs’s wishes. Apple is now truly his company,’ says one pundit 
 
 
 
 ©Getty Street credibility: Dr Dre, the hip-hop star, founded Beats, a headphone maker and music stream operator. Apple is not just adding to its portfolio with the move, it is buying urban cool 
 
 ©AP New offering: the Ekocycle headphones by Beats. With growth of the iPad slowing and iPod sales dwindling, Mr Cook has been under pressure to reduce its reliance on the iPhone 
 
 ©Getty Linked to Apple: Jimmy Iovine, Beats chairman, has said the group’s founding six years ago was inspired by the iPod in its marriage of tech and pop culture, but also its earpieces’ low quality 
 
 ©Getty Selling the tune: Trent Reznor, the Nine Inch Nails frontman, joined Beats last year as chief creative officer as the group continued to diversify beyond electronics and into music streaming 
 
 ©AFP Aesthetic attraction: Apple is tapping into a Hollywood culture and marketing savvy that has made Beats’ products loved by a younger demographic not always drawn to the iPhone’s minimalism 
 
 
 
 ©Bloomberg Powerful backers: billionaire James Packer, co-chairman of casino group Melco Crown, was among those investing in Beats’ music subscription service in 2013 Previous image Next image 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 Apple is closing in on its largest acquisition with the planned $3.2bn purchase of Beats Electronics, the headphone maker and music streaming operator founded by music producer Jimmy Iovine and the hip-hop star Dr Dre. 
 
 The deal could be announced as early as next week, people familiar with the negotiations said, but they cautioned that some details had yet to be agreed and talks could still fall apart. 
 
 A deal on the scale being discussed would represent a radical departure for Tim Cook, chief executive of the iPhone maker: under the late Steve Jobs, Apple was reluctant to pursue high-profile acquisitions. 
 
 Apple will acquire Beats’ streaming music service, which launched this year, and its audio equipment business, which includes its brand of headphones and audio equipment. The Beats management team will report to Mr Cook, said people familiar with the deal. Apple and Beats declined to comment. 
 
 A decade after Mr Jobs transformed the music industry with the iTunes download store and the iPod digital music player, the deal is likely to be seen as an admission that Apple needs to look outside its Cupertino labs to continue making an impact. 
 
 While Beats commands a leading position in the premium headphone market, its real value to Apple is in revitalising its “cool” at a time when iTunes has waned in popularity and Samsung’s marketing campaigns have savaged the iPhone’s brand. 
 
 Apple executives have admitted that its brand is in need of a revamp. Internal emails released during its recent patent trial with Samsung showed that its marketing chief Phil Schiller considered changing Apple’s ad agency after the success of its Korean rival’s “next big thing” campaign. 
 
 Apple is paying a hefty premium for cool: Beats took a $500m investment from Carlyle in September 2013 that valued the company at more than $1bn. “In terms of acquisitions, Apple has been very, very light in their activity,” said Richard Lane, analyst at Moody’s. “I don’t think they’ve spent $1bn in any of the last four years.” 
 
 Mr Cook said last month Apple was “on the prowl” for more acquisitions, after buying 24 companies in the past 18 months and he was not averse to large acquisitions. 
 
 The Beats move follows a string of high-priced deals in Silicon Valley, after Google acquired smart home developer Nest Labs for $3.2bn and Facebook offered an initial $19bn for WhatsApp Messenger. 
 
 One motivation for the Beats deal may lie in shifts in music consumption. Subscription services are the biggest growth area for the music industry, with revenues increasing 50 per cent to $1.1bn in 2013, according to a recent report by the IFPI, the global music industry association. 
 
 But downloads fell 2 per cent to $3.93bn – the first annual decline since Apple launched its iTunes store in 2003. iTunes is still the world’s largest music download service. 
 
 Apple has dabbled in music streaming but never launched an unlimited subscription service to compete with fast-growing rivals to iTunes such as Spotify. 
 
 In 2009 it acquired Lala, a music streaming service, and last year launched iTunes Radio, which competes with elements of Beats, as well as more established players such as Pandora. 
 
 FT Video M&A cycle turns May 2014: Global merger and acquisitions activity has just passed the $1tn mark - the first time the figure has been reached at this point of the year since 2007. 
 
 Mr Iovine and Dr Dre – real name Andre Young – were inspired to create Beats by the poor sound quality of the headphones bundled with the iPod and iPhone. Beloved by music and sports stars Beats has become a street-smart fashion brand 
 
 Ahead of Apple’s expected launch of an ‘iWatch’ accessory, Beats will also give its designers and engineers access to years of experience in what some see as the original “wearable technology”. 
 
 Nonetheless, the pricey deal is likely to raise questions about Apple’s internal capability to innovate after the death of Mr Jobs in 2011. 
 
 At the end of March, Apple’s global cash pile stood at $133bn, net of the $17bn in debt it raised last year. Since then it has raised a further $12bn, which it said at the time was to help fund its $130bn dividend and share buyback programme. However, most of its funds are held overseas and its domestic cash has fallen by $16bn to $18bn since it resumed paying dividends in 2012. 
 
 Apple deals history Date Target Value ($m) 1997 NeXT computer systems 400 2008 PA Semi chip designer 278 Jan 2010 Quattro Wireless mobile ads 275 Apri 2010 Siri voice technology Sept 2010 Polar Rose facial recognition software Nov 2010 WiGear wireless headphones July 2011 C3 Technologies 3D maps 154 Jan 2012 Anobit flash memory 390 Feb 2012 Chomp app store search May 2012 Redmatica music editing software July 2012 AuthenTec fingerprint and biometric sensors 393 Oct 2012 Color Labs photo and video sharing social network 7 Mar 2013 WifiSLAM indoor GPS start-up July 2013 HopStop.com transit guide Aug 2013 Matcha.tv video recommendation site 10 Oct 2013 Cue personal assistant app 35 Nov 2013 PrimeSense 3D motion sensors 350 Dec 2013 Topsy Labs social media data analytics 200 Feb 2014 TestFlight beta app testing platform May 2014 Beats headphone maker *3,200 Source: Dealogic and FT *mooted value ||||| Apple Inc. (AAPL) agreed to buy Beats Electronics LLC for $3 billion, its biggest-ever acquisition, nabbing a popular line of headphones and a nascent subscription music-streaming service as the iPhone maker seeks to rev up growth. 
 
 Beats founders Dr. Dre and music-industry executive Jimmy Iovine will join Apple, the companies said in a statement yesterday. The purchase price is $2.6 billion, with $400 million more that will vest over time. The acquisition is projected to close in the quarter that ends in September. 
 
 The deal signifies that Apple Chief Executive Officer Tim Cook is willing to use the company’s $150.6 billion in cash more aggressively, a departure from predecessor Steve Jobs’s playbook of acquiring smaller companies to bring in technology and talent. As sales of digital music downloads fall, buying Beats gives Apple a foothold in Internet-based streaming, where Google Inc.’s YouTube, Spotify Ltd. and Pandora Media Inc. (P) dominate. 
 
 “Music is such an important part of all of our lives and holds a special place within our hearts at Apple,” Cook said in the statement. “That’s why we have kept investing in music and are bringing together these extraordinary teams so we can continue to create the most innovative music products and services in the world.” 
 
 Photographer: David Ebener/AP Photo Close Close Open Photographer: David Ebener/AP Photo 
 
 Buying Growth 
 
 The deal indicates how the CEO, who is facing pressure to jump-start Apple’s revenue amid cooling iPhone and iPad sales, is shifting tack to acquire some growth. Even as Google and Facebook Inc. have spent billions on purchases, Apple previously avoided tie-ups of this size. Its biggest past deal was $400 million for NeXT in 1997, which brought Jobs back to Apple. 
 
 Maynard Um, an analyst at Wells Fargo Securities LLC, wrote in a note yesterday that Apple should focus its deals on new types of businesses. 
 
 “While we believe Apple should get some benefit of the doubt because of its historical success, a music-related acquisition still seems, to us, more defensive,” wrote Um. “Given the changing landscape and our view that Apple will have to eventually evolve its business model, we believe Apple should be acquiring more offensive assets to better position itself.” 
 
 Apple shares rose less than 1 percent to $629.41 as of 9:36 a.m. in New York 
 
 Iovine’s Overture 
 
 The deal had been anticipated, after news of Apple’s talks with Beats emerged earlier this month. Apple made the official announcement yesterday a few hours before its head of iTunes, Eddy Cue, and Iovine were scheduled to speak together at a technology conference. Cue will oversee the Beats Music team for Apple, while marketing chief Phil Schiller will run the Beats headphones group. 
 
 Photographer: Ty Wright/Bloomberg Beats Electronics LLC Beats by Dr. Dre headphones are displayed for sale at a store in Reynoldsburg, Ohio. Close Beats Electronics LLC Beats by Dr. Dre headphones are displayed for sale at a store in... Read More Close Open Photographer: Ty Wright/Bloomberg Beats Electronics LLC Beats by Dr. Dre headphones are displayed for sale at a store in Reynoldsburg, Ohio. 
 
 Iovine said yesterday at the Code conference in Rancho Palos Verdes, California, that he was the one who initially approached Apple about a deal with Beats, with Cook and Cue involved in negotiations to complete the agreement. Cue added that he had wanted to work with Iovine for a long time. 
 
 “At the end of the day, it’s not about what Apple’s doing today or what Beats is doing today -- it’s about the things that we’re going to do together and those things are going to be much greater than anything we could do on our own,” Cue said. 
 
 Beats Music 
 
 A central part of the deal’s allure is the Beats Music service, which highlights how serious the Cupertino, California-based company is about its own music-subscription service. Jobs had long resisted such a move, insisting that people don’t want to rent their music. 
 
 Apple took a step in that direction last year, introducing iTunes Radio, an advertising-supported music-streaming service that competes with Pandora. 
 
 While Apple’s iTunes remains the world’s largest seller of music, it only offers downloads of single tracks and albums. Music-streaming services, where a customer pays for access to the songs instead of owning them in a digital library, have gained in popularity, said Mike McGuire, an analyst at Gartner Inc. Yet the services aren’t lucrative and present business challenges, even for Apple, he said. 
 
 “They haven’t moved to a subscription model, and there are a lot of good reasons they didn’t,” McGuire said. “The big one is there isn’t a lot of money to be made.” 
 
 Apple plans to keep Beats as a stand-alone brand and the music application that will run on devices based on Google’s Android software and Microsoft Corp.’s Windows operating system, as well as those made by Apple. 
 
 Not everyone is a fan of music-streaming services. Musical acts including Radiohead have criticized subscription services because they don’t compensate artists as well as the pay-per-track model. For instance, the latest album from the band The Black Keys is available on iTunes, though not Spotify. 
 
 New Service 
 
 Beats introduced its music-subscription service earlier this year. Like Spotify and other rivals, the company offers unlimited access to millions of songs in exchange for a monthly fee. Beats hired music critics, radio DJs and record-label veterans to create playlists and other curation tools to help customers navigate the overwhelming amount of music available -- a component Iovine said was missing from the experience. 
 
 “It needs feel. It needs culture,” Iovine said in an interview with Bloomberg Businessweek in 2012. “What Apple has in the downloading world is very, very good. But subscription has an enormous hole in it, and it’s not satisfying right now.” 
 
 Iovine said at the Code conference that Beats Music now has 250,000 subscribers after a few months. By contrast, Spotify has about 10 million. 
 
 Apple Pipeline 
 
 In addition to music, Cue hinted at the Code conference about Apple’s interest in television. He said the TV-viewing experience today is poor and that it’s a hard problem to solve because of all the different parties involved, including media and pay-TV companies. He declined to elaborate on the company’s plans beyond that its Apple TV product will continue to evolve. 
 
 Cue also said that products to be introduced later this year are the the best pipeline Apple has had in 25 years. The company is holding its annual developer conference next week in San Francisco. 
 
 In buying Santa Monica, California-based Beats, Apple also would get the company’s colorful, high-end headphones. Iovine and Dr. Dre, whose given name is Andre Young, started Beats in 2006 amid rising use of iPods and smartphones to listen to music on the go. 
 
 The pair quickly proved their marketing acumen. The headphones, priced at about $170 to $450, gained popularity as stylish accessories for the general public and not just audiophiles, fueled by partnerships with musicians, fashion designers and athletes like San Francisco 49ers quarterback Colin Kaepernick and NBA All-Star Lebron James, who helped pitch the products to a younger audience. 
 
 “They have done a hell of a job in branding,” McGuire said. 
 
 Fashion Finds 
 
 With Iovine and Dr. Dre, Cook continues to bring in people with fashion experience. Former Burberry Group Plc CEO Angela Ahrendts now runs the company’s retail operation, and former Yves Saint Laurent CEO Paul Deneve is working on “special projects” for Cook. 
 
 Apple and Beats have deep ties. Iovine, who is stepping down as an executive at Universal Music Group as part of the deal, was a friend of Jobs and an early music-industry advocate for Apple’s efforts with the iPod and iTunes. 
 
 The acquisition is a boon for Iovine, who has worked on projects as varied as Bruce Springsteen’s “Born to Run” and the movie “8 Mile,” and Dr. Dre, whose seminal rap album “The Chronic” helped make rap music popular with suburban teenagers in the 1990s. 
 
 Universal Music was an investor in Beats, along with private equity firm Carlyle Group LP. Universal Music said yesterday that John Janick, chief operating officer and president of Interscope Geffen A&M, would succeed Iovine as Interscope chairman. 
 
 “We wish Jimmy the very best and look forward to enhancing our partnerships with Apple and Beats for many years to come,” said Lucian Grainge, chairman and CEO of Universal Music, in a statement. 
 
 To contact the reporters on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net; Brian Womack in Rancho Palos Verdes at bwomack1@bloomberg.net 
 
 To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net Robert Fenner ||||| Dr. Dre leapfrogged Jay Z in FORBES' latest rankings of hip-hop's richest artists, claiming the number two position as his net worth soared to an estimated $550 million. Now it looks like the Beats cofounder could lay claim to the top spot in a matter of days. 
 
 Late Thursday night, the Financial Times reported that Apple was in talks to buy Beats for $3.2 billion; the deal would be the computer giant's largest acquisition ever. Dre's stake in Beats currently stands at somewhere around 20-25%; we valued the company at $2 billion in our latest round of estimates. 
 
 A sale for $3.2 billion would nearly double the value of Dre's holdings, though capital gains taxes could take a bite out of his big payday, likely leaving him with a net worth in the neighborhood of $800 million. It's not quite enough to land on the Forbes 400, but it would easily make him hip-hop's richest man, topping current champion Diddy by $100 million. 
 
 “Beats has a unique brand—it speaks to a nice young demographic, which is really interesting to marketers,” said Peter Csathy, former president of Musicmatch, an early digital music purveyor acquired by Yahoo in 2004 for $160 million. “When I think about Beats, I think about it as a lifestyle, I think of it as a media company, not just a hardware and music-focused company.” 
 
 The value of that brand would also make a handful of other wealthy entrepreneurs even wealthier if the Apple deal goes through. Beats recently raised $60 million in funding from current investors including Dre, cofounder Jimmy Iovine and billionaire Len Blavatnik, via his company Access Industries. 
 
 A sale would also nix the possibility of a Beats IPO, which some speculated could be in the offing after the company hired chief financial officer An De Vooght, who spent 16 years in a similar role at Red Bull after stints at Sony and Price Waterhouse, in March. 
 
 Apple's Beats buyout is still not official, and could certainly fall through. In the meantime, though, Dre appears set to break new ground in the business of music yet again. 
 
 For more about the music industry, check out my Jay Z biography, Empire State of Mind. My next, Michael Jackson, Inc, will be published in June. You can also follow me on Twitter and Facebook.
– Apple has made the biggest buy in its history—and made Dr. Dre the richest man in hip-hop history. The company has confirmed that it is buying Beats Electronics for $3 billion, down from the $3.2 billion discussed earlier this month, reports Bloomberg, which notes that Apple is sitting on enough cash to have bought the headphone and music-streaming firm 50 times over and CEO Tim Cook appears ready to use the money pile more aggressively than predecessor Steve Jobs ever did. Dre has a 25% stake in the firm and the deal puts him close to being rap's first billionaire, the BBC notes. So what's in it for Apple? The company appears to be paying a "star-struck valuation" for a cool company, one analyst tells CNET, saying the price tag appears too high unless Apple has a secret strategy like "expanding into headphones used as wearable tech." But Cook says the buy was a "no-brainer" and while Apple could easily have built a similar streaming service, the talent at Beats Electronics is the most exciting part of the deal. "These guys are really unique," he tells the New York Times. "It's like finding the precise grain of sand on the beach. They're rare and very hard to find."