Apple might be gearing up for its biggest acquisition ever: a $3.2 billion purchase of headphone and online music streaming company Beats Entertainment. If the deal is completed, it will be the biggest ever acquisition of a company by Apple, which has historically focused on internal operations instead of large-scale acquisitions.
Blogs are reporting that a deal could go ahead as early as next week, with Apple set to pay $3.2 billion for the headphone company. Analysts believe that the acquisition could give Apple a bigger share of the music accessories market as well as providing it with a lucrative online music asset.
Despite the obvious interest for Apple in the music and phone accessories market, analysts are confused about Apple’s interest in acquiring a Beats music streaming company. Beats opened its subscription-based online music service in early 2014, and has already attracted millions of users with a series of lucrative offers.
As the owner of iTunes – the world’s largest music store – Apple already has a large share of the online music streaming market. Forrester analyst James McQuivey says that there is a “big overlap” between the two company’s customer bases, and plans to acquire Beats Entertainment by Apple were “really puzzling.”
Investment bloggers have also noted that the price Apple is reportedly interested in paying for Beats Entertainment is significantly higher than recent valuations of the company. After receiving a $500 million funding round late last year, the company was valued at slightly more than $1 billion – far less than the current $3.2bn price.
Apple’s profits have ben strong in recent months, with the company reporting £10.2 billion in income during the first quarter of 2014. Experts believe that Apple might view Beats Entertainment as a strategic acquisition, with the company’s streaming service less immediately important than gaining a foothold in music accessories.
