Apple is close to paying a record $3.2 billion for Beats Electronics, two people with knowledge of the matter said, an expensive foray into music streaming and headphone gear that would mark a departure for the usually cash-conservative iPhone maker, according to the Associated Press.
Both companies are hashing out details and the envisioned deal could still fall through, one person told Reuters on condition of anonymity because the discussions were private, the AP reported.
A second source familiar with the matter told Reuters that Apple was in the market for a subscription-based music service to complement its "iRadio" ad-based offering, launched in 2013 as part of an attempt to jump into a music-streaming arena then split between a handful of startups such as Pandora, according to the AP.
Founded by rapper Dr. Dre and legendary music producer Jimmy Iovine, Beats Electronics is best known for its "Beats by Dr Dre" line of trendy headphones that vie with the likes of Skullcandy, Sennheiser Electronic and Bose Corp, the AP reported.
This year, it launched a music service that has won plaudits for its slick design and human music curation, versus the computer-algorithms that determine playlists for most of its rivals, according to the AP.
But analysts on Thursday questioned whether Beats, valued at just $1 billion during its last funding round in September, was worth that price, the AP reported.
Apple had more than $130 billion in cash as of the end of March, but the vast majority of that is parked abroad and investors have called on the company to return more cash in the form of dividends and buybacks, according to the AP.
Apple declined to comment on the report and Beats Electronics did not respond to requests for comment on the news, which was reported first by the Financial Times, the AP reported.
