Beats Wants to Buy Back HTC's Stake
Beats is looking to buy HTC's remaining share in the company and seek another investor.
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. However, just two years on, it looks like Beats is ready to kick HTC to the curb. The company sold half of its 50 percent stake back to beats in July of 2012. Now, the Wall Street Journal is reporting that Beats is 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 newspaper cites people familiar with the matter that say Beats hopes to buy out HTC's 25 percent stake and the company is in talks with an investor that could provide debt financing and potentially take a minority stake in the company. Though neither party has confirmed any of the rumors, it would seem the partnership Beats CEO Jimmy Iovine once described as "an opportunity for two world-class companies to redefine the smartphone industry and define the future," is on the verge of collapse.
When HTC sold half of its share in Beats back to the company, the company said the "realignment" of the agreement would "allow Beats more flexibility for global expansion while maintaining HTC's major stake and commercial exclusivity in mobile." Indeed, part of the $300 deal was that HTC had exclusive rights to manufacture smartphones with Beats audio. No doubt if Beats succeeds in buying HTC out, that will change pretty quickly.
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."