HTC sells half its shares in Beats back to Dre and Iovine
By CMU Editorial | Published on Tuesday 24 July 2012
HTC has announced that it has sold half of its shares in Beats Electronics back to founders Dr Dre and Jimmy Iovine for $150 million. The sale reduces the mobile phone company’s share from 50.1%, bought for $309 million last August, to 25.57%. The news caused HTC’s share price to slip by 4% yesterday, according to Reuters. While Morgan Stanley described the move as “puzzling”.
In its own statement, HTC described the deal as “a realignment of [HTC and Beats’] business agreement that provides Beats with more flexibility for global expansion while maintaining HTC’s major stake and commercial exclusivity in mobile”.
The company added: “Over the last year, HTC and Beats have made great progress in sound innovation, product integration and brand awareness with successes like the HTC One. HTC and Beats will continue to work closely, including a joint global marketing campaign later this year”.
Contrary to this, Morgan Stanley said: “Reducing its holding to 25.57% signals HTC’s separation from Beats’ operations. Possibly it implies that there was not much synergy between the two companies from the beginning”.
This news comes just weeks after it was announced that Beats had bought US music streaming service MOG.