Beats Takeover by Apple: Price Dropped $200 Million Due to Dr Dre Leak
Apple bought Beats in 2014 for $3 billion, but the original price was $3.2 billion. This drop of 200 million dollars is explained by the blunder of Dr Dre, who claims to be the co-founder of Beats. The book After Steve: How Apple Became a Trillion-Dollar Company and Lost Its Soul from journalist Tripp Mickle shares the details of this story at the level of the 10th chapter.
Jimmy Iovine, Tim Cook, Dr Dre and Eddy Cue
The Dr Dre gaffe that cost $200 million
In 2014, Apple boss Tim Cook wanted to buy Beats because he liked the fact that music playlists were created by humans, not algorithms. Also, there was the Beats Music streaming service. This provided the basics for creating Apple Music.
Discussions were therefore held to negotiate the transaction and set a price. Jimmy Iovine, music producer and co-founder of Beats, participated in the negotiations. He then warned his teams that the information on the takeover – which was being finalized – must not leak to prevent the agreement from falling through. But not everything went as planned.
During the night, Jimmy Iovine received a call from Puff Diddy. The latter reports to him that Dr. Dre and Tyrese Gibson have published a video on Facebook to reveal the takeover. In this video, Dr Dre says he becomes the first billionaire rapper thanks to the transaction.
In view of the situation, Jimmy Iovine panicked. He was really worried and thought that this video would cause Apple to abandon the takeover of Beats. Following this, Tim Cook invited Jimmy Iovine and Dr. Dre to Apple headquarters to have a meeting. Tim Cook happened to remain calm during the conversation, but he admitted he was disappointed that the information leaked before the takeover was formalized. At the same time, the executive said the video didn’t shake his belief that the Beats acquisition was a good thing for Apple.
Tim Cook took advantage of Dr Dre’s leak to revise the price down and lighten the $200 million bill to $3 billion. Jimmy Iovine and Dr. Dre accepted the new offer, knowing they were at fault (especially the latter).
