As rumors of a supposed deal between Apple Inc. (NASDAQ:AAPL) and Beats Electronics swirl, there are many questions being asked. Is Apple overpaying? Why on earth would it want a company like Beats? What does Beats have to offer Apple? Will Dr. Dre join Apple’s ranks? Is the deal really in the works and if so, will it actually happen?
Finally we’re starting to get some answers to these questions.
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Beats and Apple: both cool
Forbes contributor Joe Harpaz notes that Dr. Dre is seen as being extremely cool, as is Apple Inc. (NASDAQ:AAPL). In fact, the cool factor has become a big part of Apple’s business. The iPhone remains cool even though other products offer a few more advanced features, showing that for some, coolness is more important than features. So he posits that Apple could simply be aiming to hire Dr. Dre and capitalize on his celebrity status.
However, he also notes that partnering with a celebrity doesn’t always benefit companies or turn out so well. For example, BlackBerry Ltd (NASDAQ:BBRY) (TSE:BB) hired Alicia Keys to be its global creative director, but then she used an iPhone to tweet about her job at BlackBerry. Oops.
Apple may see tax benefits
And then there’s the issue global corporations are always worried about: taxes. Harpaz says along with Beats Electronics, Apple Inc. (NASDAQ:AAPL) would acquire Beats Electronics Holding Limited, a Beats subsidiary formed in Ireland in 2012. He suggests that Apple could use that company to buy other companies using foreign funds it has not repatriated, depending on how the acquisition is structured.
Will Apple really buy Beats?
So are these two benefits really worth $3.2 billion to Apple Inc. (NASDAQ:AAPL)? They may be, according to TechCrunch‘s sources. The website reports that the deal is indeed in negotiations, and its sources assign a 70% likelihood that it will actually happen. The sources also say that Apple isn’t really interested in the technology Beats owns (not much of a surprise here). The company reportedly wants Beats’ talent—namely, the famous rapper Dr. Dre himself.
TechCrunch’s sources say Apple Inc. (NASDAQ:AAPL)’s recent hiring patterns back up this theory. They note that the company has hired a number of “culturally aware and highly skilled managers,” like former Burberry executive Angela Ahrendts, Ben Shaffer, formerly of Nike Inc (NYSE:NKE), former Yves St. Laurent CEO Paul Deneve, and others.
In addition to the talent that comes along with the deal, Apple Inc. (NASDAQ:AAPL) would also receive benefits from Dr. Dre’s and co-founder Jimmy Lovine’s relationships with record labels. As Apple tries to expand iRadio, these relationships could be important in terms of negotiations for content.