Apple Inc. (NASDAQ:AAPL) underlined the importance it places on its Beats Electronics LLC acquisition today by inking a deal with Vivendi SA to buy out the company’s share of Dr. Dre’s music firm. Vivendi held 13% of Beats Electronics’ outstanding shares prior to the deal, which will see Apple pay the Paris-headquartered mass media corporation $404 million to acquire them. The Cupertino electronics giant is evidently aiming at full ownership and control of Beats.
Vivendi SA has been selling off numerous properties as it pursues a new, more focused strategy. It has sold off approximately $30 billion worth of holdings, including the latest deal with Apple. Among the most notable are the sale of Meloc Telecom to a Dubai company for $4.2 billion, and the breakaway of Activision Blizzard, a now-independent company that makes lucrative video games such as World of Warcraft, Starcraft, and the Diablo series.
The sale places Beats Music, Beats’ subscription Internet streaming music service, even more firmly into the hands of Apple Inc. (AAPL). Vivendi will continue to be a stakeholder in the overall streaming music market, however, since it also owns part of Apple’s potential rival Spotify. Whether it will seek to strengthen this holding, leave it as it is, or sell it off as well is unknown at this point in time.
The United States government has approved the deal as being in line with regulatory requirements, following the European Commission’s similar approval in the European Union (EU). Immediately following receipt of the American government’s approval, Apple added a splash page welcoming Beats to the “Family,” while Beats put up a similar page on their own site.
Apple’s (AAPL) obvious determination to gain as much control over Beats Electronics LLC as possible seems to highlight the company’s depth of interest in its new acquisition. Since Jimmy Iovine and Dr. Dre (Andre Young) have already agreed to join the ranks of Apple executives, this seems to be further confirmation that Apple’s purchase is intended to give the firm access to the potential cash cow of Beats Music’s streaming Internet music service.
August 1st, 2014 may prove to be an important date in Apple’s quest to modernize iTunes and bring it up to date with current music consumption models. Apple certainly gave more of a public welcome to Beats Electronics than to any of the several dozen other companies it has bought in the past year, perhaps giving even more of a clue to the deal’s significance.
