Beats Electronics Plans To Buy Out HTC’s Stake

Posted Aug 19, 2013

Beats Electronics is looking to buy out HTC’s 25% stake in the company.  Beats’ flagship product is known as the Beats by Dr. Dre headphones.  At one point, HTC owned 50.1% of Beats Electronics.  Beats Electronics LLC was founded by Andre Young (known as Dr. Dre) and music executive Jimmy Iovine.

Beats is in talks with an investor for debt financing and to take a minority stake in the company.

Beats Electronics is expecting to broaden their product line by developing in-car audio systems and consumer electronics.

Since HTC’s financial situation is looking bleak, Beats has plenty of reasons to distance themselves from the Taiwanese mobile phone company.

Beats’ revenues hit around $1 billion last year.  The company was at under $200 million in 2010, according to sources with the WSJ.

Beats tried to raise $700 million from the credit markets to refinance debt and buy out HTC’s stake in the company.  Investors questioned whether Beats headphones were just a trend and they were concerned about Beats’ terms.

HTC acquired the 50.1% stake in Beats Electronics two years ago for around $300 million.  That investment was strategic because HTC integrated Beats’ audio technology in some of their smartphones.

[Source: WSJ]