Apple is reportedly planning to announce its highest value deal with Beats sometime this week but for a bargain price of $3 billion.
Apple Inc., the second biggest smartphone company, has been in the news a lot lately. Among other things, Apple has got people's attention after reports claiming plans of acquiring Beats Electronics surfaced online. The deal, which was originally valued to be at $3.2 billion by the Financial Times, is widely seen as Apple's biggest push towards online streaming service. Now, it appears the Cupertino tech giant will finally make the rumored deal official sometime this week.
The latest development in the Apple-Beats deal was reported by The New York Post, Tuesday, adding that Apple has lowered the reported price of the deal from $3.2 billion to $3 billion. The Post speculates that the outcome of the new price could be based on a supposed leaked report of Beats Music figures earlier this month.
According to the FT report, leaked figures showed Beats Music had 111,000 paid subscribers of its streaming service in March. That puts it far behind its rival Spotify, which is leading the industry with 10 million paying customers and 30 million free users, according to the latest statistics announced by the company, last week.
"Apple hadn't even begun its due diligence process when news of the number came out," unnamed source close to the talks told The Post, Tuesday.
The news publication also gave a breakdown of who gets what once the deal is finalized. As the company's co-founders, Jimmy Iovine and Dr. Dre will take home hundreds of millions of dollars and stake holder Universal Music Group will fetch $400 million as a part of closing deal. But the bargained price of $3 billion will pull Dr. Dre away from the billionaire club.
With Dre's 20-25 percent stake in Beats, his estimated share will be $750 million based on the $3 billion sale figure, which is lesser than the projected $800 million from the $3.2 billion price. So after paying the revenue to the US federal government for the $750 million, Dre's previous earnings of $275 million over the last three years will still put him short of becoming the first billionaire in hip-hop.
