WSJ: Beats To Buy Back HTC Stake And Look For New Investor


Beats Electronics is looking to buy back HTC’s share in the company and find a new investor that can provide funds for growth, according to sources for The Wall Street Journal.

The partnership between the two companies has lasted for over two years, but it appears HTC is no longer able to provide the kind of cash Beats needs as it struggles to compete in the smartphone market.In recent months, Beats has added portable speakers, in-car audio systems, and other consumer electronics to its lineup, and the company is expected to launch a new music streaming service that will compete with the likes of Spotify and Rdio soon. But it needs more cash to continue broadening its business.

According to people familiar with the matter, it is now in talks to with a new investor that could help it buy back HTC’s 25% stake in the company. The move comes just months after Beats turned down another deal that would have raised “hundreds of million of dollars in cash for acquisitions and investments,” WSJ reports.

HTC paid over $300 million for a 50.1% stake in Beats in mid-2011, but it sold half of its share back to the company’s founders a year later for $150 million. HTC has been integrating Beats audio technology into its products ever since, and until recently, it was also providing a free pair of Beats earphones with all of its high-end smartphones.

This isn’t the first time Beats has tried to split from HTC, though. Earlier this year, the company tried to raise $700 million to refinance its debt and buy back HTC’s stake, but according to WSJ, investors questioned whether the company’s success in the headphone market could be sustained, and they were concerned with the “aggressive terms” Beats was seeking.