Beats Electronics finally decided to buyout the HTC’s remaining stake in the company for $250 million in cash. This buy out might end the dependability of both the companies, but Beats’ move announced after it has raised the investments from Carlyle Group – a private equity firm from Washington.
For HTC, this move might help to add some money to their cash balance, nothing more than trying to recovering from the “eight-year low” of it’s stock price. Bloomberg says that the deal will close in Q4 2013 and by selling remaining 24.84 percent of stake in Beats, HTC will gain a Taiwanese NT$2.52 billion ($85 million) pretax profit. HTC bought 50.1 percent of the stakes of Beats Electronics in 2011 and sold almost half of the stake back to the company in mid-2012 for an estimated net loss of $4.8 million. Despite this step, HTC Corp closed down 2.99% yesterday on the Taiwan Stock Exchange at NT$130.
According to WSJ, Carlyle planed to invest $500 million in Beats soon. Sandra Horbach, Carlyle’s head of consumer and retail, said in a statement:
“We are confident that Beats will continue to drive innovation and growth in the premium audio accessory market, particularly as the proliferation of smart phones and tablets stimulate increased consumption of digital media.”
Beats Electronics is an audio company, founded by music stars Dr. Dre and Jimmy Iovine, and it has grown tremendously. The company produced the premium headphones cost between $200 and $400 and analysts estimates about 54% of US Premium headphones market is covered by the Beats. The company with 360+ employees has managed to generate approximately $1 billion in 2012, where it only generated $200 million revenue in 2010, when it had only 30 employees.
via NY Times