Carlyle to acquire minority stake in Beats Electronics for $500 mn
28 Sep 2013
US private-equity firm Carlyle Group is investing $500 million for a minority stake in Beats Electronics, which values the premium headphone maker at more than $1 billion.
In a related deal, struggling Taiwan-based mobile device maker HTC yesterday said that it had sold its remaining 24.84-per cent stake in Beats back to the California-based company for $265 million.
HTC had acquired a 50.1-per cent majority stake in Beats in 2011 for $309 million, but sold 25 per cent in less than a year later back to Beats founders, rapper and hip-hop producer Andre "Dr. Dre" Young, and music producer Jimmy Iovine, for $150 million.
As part of the deal, HTC was to use the Beats' headphones and audio technology into its own smartphones, but HTC's market share started declining due to competition from Apple and Samsung.
Carlyle, which has $180 billion of assets under management, said that it will work with the Beats management team to continue expanding the brand and building the business both domestically and internationally.
Beats co-Founder and CEO, Iovine said, ''These transactions represent the evolution of the financial strength and significant growth prospects of Beats. Carlyle is a fantastic investment partner and we look forward to building the next chapter of Beats.''
In 2006, Iovine and Dre set out to solve the problem of poor sound quality caused by the digital revolution combined with the proliferation of cheap earbuds bundled with MP3 players, laptops, mobile phones and other portable devices.
Their solution was founding Beats in 2008. Beats portfolio comprises the Beats by Dr. Dre family of premium consumer headphones, earphones, and speakers as well as patented Beats Audio software technology.
Beats currently has more than 64 per cent percent market share of the $100-plus premium headphone category in North America according to data provided by NPD Group.
Its products are used in Chrysler vehicles, Hewlett Packard computers and monitors, and HTC smartphones.