Apple look set to acquire Beats Electronics

Beats Headphones

Last night rumours were circulating that the Californian company were in preliminary talks to purchase Beats for £1.9bn.

The story first cropped up in the Financial Times who said that the deal could be completed as early as next week.

Other media outlets such as Bloomberg, The Wall Street Journal and the New York Times have jumped on the story confirming the rumours to be true.

If the £1.9bn figure is to be believed it will eclipse the largest amount that Apple has ever paid to buyout another company. That record was previously help be NeXT which Steve Jobs started up when he was ousted from Apple; Apple paid approximately £240m to acquire them in 1996.

Over the years Apple has stockpiled £90bn, so acquisitions such as are just small fry in comparison to Apple's cash pile and value.

Apple CEO Tim Cook said in February that Apple wouldn't be fearful of making large acquisitions if they felt that the purchase was the right thing to do. Cook said: "We have no problem spending 10 figures for the right company, for the right fit that's in the best interest of Apple in the long-term. None. Zero."

Music producer Jimmy Iovine and rapper Dr Dre founded Beats in 2008. Since its birth the company has gone from strength to strength; they created the most popular and stylish headphones on the market and have also launched a subscription based streaming service called Beats Music. The service is a direct competitor to Apple's own service iTunes Radio as well as other such as Spotify and Pandora.

Does Apple buying Beats make sense? Well it depends what they want to use Beats' technology for. Beats headphones control 27pc of the headphone market, so Apple could be looking to Beats for help in improving the quality of their own headphones that are often heavily criticised. However Beats' headphones aren't without their critics; many users say they are 'fashion over function' devices meant for teenagers and young adults.

It has been rumoured that Apple is completely redesigning iTunes to help the slump in its music sales. It's believed that they want to include a music service in their redesign therefore Beats Music could be just what they're looking for. With Beats Music they will be acquiring a ready-made product, which removes the need for them to build their own service.

It has also been revealed that Beats CEO Jimmy Iovine could be about to join Apple in a special advisory role. The New York Post reported that "Beats Electronics boss and veteran music industry executive Jimmy Iovine is in talks to join Apple as a “special adviser” to Tim Cook on creative matters, two sources close to talks tell The Post."

Neither Apple nor Beats have yet commented on either story.