Audio company Beats Audio may be wanting to to buy back HTC’s stake in the company in the near future, according to a report. HTC currently owns a 25% stake in Beats Audio and supplies all its handsets with Beats Audio branding.
Beats Looking to Buy Back HTC Stake
The Wall Street Journal is reporting that Beats Electronics LLC, which manufactures earphones and headphones under the brand of Beats by Dr Dre is wanting to pull out of its partnership with HTC and buy back HTC’s chunk of shares.
HTC acquired a 50% stake in Beats Audio back in 2011 for $300 million. The company’s devices then began shipping with Beats Audio’s propriety audio boosting technology. Although HTC’s phones did sound better than before, you could only fully experience the improvement if you used Beats earphones or headphones. Not many consumers liked that, and thus the deal didn’t look very good.
Beats Electronics has grown since then. It now generates revenue of over $1 billion, and is looking to broaden its audience. Founder Andre Young, though you may know him better as Dr Dre – is expanding the product portfolio to include speakers, an online music streaming service (Beats Music), and audio systems for automobiles.
By the looks of it, it has seemed like both companies haven’t been very pleased with the 2011 deal. Just last year, while HTC was facing multiple problems ranging from low sales to a bad stock performance, Beats bought back 25% out of the 50% stake HTC held in the company. While Beats did not see any noticeable boost in sales due to the partnership, HTC phones too did not get a lot of compliments for the improved audio.
Beats recently turned down another deal which could have raised hundreds of millions of dollars for the company’s operations, mergers, and acquisitions. However now, the company seems to be looking to bring in a new investor for a fresh influx of cash – this seems to be the reason for wanting to buy back HTC’s stake.
The new investor is as of yet unknown. Both HTC and Beats Electronics have declined to comment on the matter. But these might just be the last few days of the red and white ‘beats audio’ logo on the back of every HTC handset.