HTC is getting out of the Beats brand
The rumors were true. Beats and HTC are breaking up. Last month there were rumors that Beats wanted to buy back HTC's stake in the audio company and find another investor. Bloomberg today reports that HTC is selling its remaining 24.84 percent stake in Beats Electronics for $265 million.
The deal will apparently net HTC $85 million in pretax profits when it closes in the fourth quarter of this year.
Back in August of 2011, HTC poured $300 million into a deal with Beats Electronics, manufacturer of the hugely popular 'Beats by Dre' audio equipment. Just one year later, in July of 2012, HTC sold half of its 50 percent stake back to Beats. In mid-August, there was talk that Beats was looking to buy out HTC's remaining stake in favor of a new investor that's willing to put up the funds for growth.
The deal will offer HTC, which is facing tough times, a nice injection of cash and frees Beats up to seek another investor. Who will that be? Well, Bloomberg writes that Carlyle Group is coming on board, though it's only with a minority investment. That deal is expected to close in the fourth quarter, though financial details of the agreement were not disclosed.
Beats was launched in 2009 as part of an effort to improve the quality of audio products being sold today. Iovine, also the CEO of Interscope Geffen A&M Records, said in 2009 that the record industry had allowed music to be degraded and that Beats hoped to change that. "It's one thing to let it get stolen," he told CNet. "It's another to allow it to be degraded because then you really don't have a chance...video games and TV quality are getting better and the quality of our work is getting lower. If that happens, then music will become disposable."