Apple (AAPL) has announced that it will buy music streaming company Beats Electronics for $3 billion — and AAPL stock is up slightly on the news.
The purchase (which had been rumored for months) is part of Apple’s plan to increase its music business that has lost steam to streaming services.
AAPL is using the purchase to protect itself against other services taking more users away from Apple’s iTunes service.
“Apple suddenly has regained its cool,” Sony Music CEO Doug Morris told Yahoo News. Morris was one of the first recording executives to embrace iTunes at Iovine’s urging more than a decade ago.
Via the Wall Street Journal:
In Beats, Apple is getting a music-streaming service, high-end headphones and music-industry connections. Beats’ co-founders, rap star Dr. Dre and music mogul Jimmy Iovine, will join Apple.
Apple will continue to use the Beats brand, a rare move for a company that has almost always focused on its Apple brand. It became one of the world’s largest technology companies by creating huge, new consumer electronics categories with the iPhone and iPad. But it hasn’t introduced a breakthrough product since co-founder Steve Jobs died in 2011.
The acquisition –via $400 million in stock and $2.6 billion in cash — is the largest in Apple’s history.
The deal is expected to close by the end of the summer.