Apple Inc.’s share price down, to acquire Beats Electronics in a deal estimated to 3 billion dollars

Apple Inc. officially announced that it managed to reach an agreement over the acquisition of Beats Electronics LLC. The deal is estimated to 3 billion dollars and is considered its largest one so far. Both companies confirmed that the founders of Beats Electronics – Dr. Dre and Jimmy Iovine will join Apple Inc.s team. The deal is expected to be finalized in the financial quarter that ends in September 2014.

The Chief Executive Officer of Apple Inc. – Mr. Tim Cook said in the companys statement, which was cited by Bloomberg: “Music is such an important part of all of our lives and holds a special place within our hearts at Apple. That’s why we have kept investing in music and are bringing together these extraordinary teams so we can continue to create the most innovative music products and services in the world.”

The purchase of Beats is believed to help Apple Inc. increase its earnings. Some analysts shared their concerns that the price of the deal is too high for a music streaming service that currently has only about 250 000 users, but Apples Chief Executive Officer Cook is convinced that the acquisition makes sense mainly because of the future benefits the company is to take advantage of. In addition, the company hopes to become not only more competitive, but also more popular among young users.

The headphones division of Beats Electronics LLC has posted a 1.1-billion-dollar annual revenue last year and announced a 30% revenue increase during the first financial quarter of 2014.

One of the analysts, who work for Wells Fargo Securities LLC – Maynard Um commented on the acquisition in a note, which was cited by Bloomberg: “While we believe Apple should get some benefit of the doubt because of its historical success, a music-related acquisition still seems, to us, more defensive. Given the changing landscape and our view that Apple will have to eventually evolve its business model, we believe Apple should be acquiring more offensive assets to better position itself.”

Apple Inc. was 0.26% down to close at 624.01 dollars per share yesterday, marking a one-year change of +41.36%. According to the information published on CNN Money, the 44 analysts offering 12-month price forecasts for Apple Inc. have a median target of 637.50, with a high estimate of 777.00 and a low estimate of 360.00. The median estimate represents a +2.16% increase from the last price of 624.01.