Dr. Dre To Be Hip Hop’s First Billionaire By Selling Beats By Dre to Apple

by | May 9, 2014 | Business, News | 0 comments

Just when you thought Hip Hop was for kids, Dr. Dre is poised to show you just how big and powerful hip hop really is on the world economic stage.

The rapper, producer, turned business mogul is sitting a  terrific spot this afternoon as speculation surrounding his Beats By Dre company. It is strongly rumored that Apple is in talks with the company to purchase them for $3.2 Billion dollars.

You read that correctly, $3.2 BILLION!

dr dreMany knew these flashy head phones that have become a cultural phenomenon were great, but for them to be worth billions is a bit shocking to most people. However, the numbers speak for themselves. Over the last calendar year, the company has pulled in over $1.2 billion dollars in revenue and the projections show it should retain stable growth into the future.

Riding the heels of Beats success, Dr. Dre recently passed Jay Z on the Forbes’ list of the richest hip hop artist to land at number 2. Currently, the number 1 spot is held by Sean “Diddy” Combs and his $700 Million valuation, which isn’t bad for someone  once thought to be a lonely producer rapper that wanted to be in the spotlight more than the acts he managed.

Dr. Dre isn’t the sole owner of the company, he and head of music, Jimmy Iovine, started the company together in 2008. Eventually, they took on some partners including the Carlyse Group and others, leaving less of the company to Dr. Dre.

Obviously, they added some powerful partners to the group, but with the split Dr. Dre is still left with somewhere between 20% and 25% of the company.

Just 20% of the $3.2 Billion price tag would land Dr. Dre another $640 Million dollars. This would be more than enough to put him over the Billionaire hump. However, minus the fees and capitalization taxes he would have to pay might bring him down below the, but close enough to cause a stir in the business world.

“Beats has a unique brand—it speaks to a nice young demographic, which is really interesting to marketers,” said Peter Csathy, former president of Musicmatch, an early digital music purveyor acquired by Yahoo YHOO -0.46% in 2004 for $160 million. “When I think about Beats, I think about it as a lifestyle, I think of it as a media company, not just a hardware and music-focused company.”

Source: http://www.forbes.com/sites/zackomalleygreenburg/2014/05/09/apples-3-2b-beats-buy-would-make-dre-raps-richest-man/

It is important to note this deal isn’t complete yet. Apple hasn’t released a statement, so we are waiting.

However, we do know if this deal goes through, then it will end the rumors of Beats By Dre going public issuing their own IPO, Initial Public Offering. This is because Apple is a public company and would bring the new acquisition under their umbrella instead of making it a stand alone company.

Either way, Dr. Dre is posed to be one of the world’s newest billionaires and is sitting on top of the world.

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