In mid-August, a rumor popped up in the Wall Street Journal saying Beats by Dr.Dre was looking to break its partnership with HTC, one which had been in effect since 2010. Now, reports are coming in that HTC is indeed about to sell its stake back to Beats. In 2010, HTC owned 50 percent of Beats, before selling half last year for $150 million. The remaining 25 percent has increased in price considerably since then, as the new deal will close at $265 million.
That’s quite a bump in a short space of time, and it could be evidence of a hard-fought battle between to firms keen to make the best out of a bad situation. According to the Wall Street Journal, Beats was a decent investment for HTC, having initially put down $300 million and walked away with a grand total of $415 million. However, analysts say the partnership didn’t help HTC sell phones, which was surely the point.
As expected, Beats has cuddled up to a new investor, the Carlyle Group, which will be putting up $500 million to help Beats expand both its product portfolio and international distribution. It’s predicted Beats will now have the money to get its streaming music service up and running, something which has been discussed since March. Any hopes of the company taking complete control of its own future may be dashed though, as the Carlyle Group will choose two of the six members of the board, with Beats management sitting on the other four.
HTC gets a considerable injection of cash, helping it pay Robert Downey Jr.’s salary and perhaps, make some more smartphones too. We’re expecting the launch of the HTC One Max soon, after it was a surprise no-show at IFA earlier this month, and perhaps a new One-based Windows Phone 8 handset too. It’s not clear whether HTC will continue licensing Beats Audio software on its phones, but from the poor sales figures to what sounds like a bad breakup, the two may have parted ways permanently.