Business & Economy

Confirmed: Apple to buy Dr. Dre's Beats for $3 billion

File photo: Beats headphones are sold along side iPods in an Apple store on May 9, 2014 in New York City.
File photo: Beats headphones are sold along side iPods in an Apple store on May 9, 2014 in New York City.
Andrew Burton/Getty Images

Apple is striking a new chord with a $3 billion acquisition of headphone and streaming music company Beats Electronics.

Wednesday's announcement confirms earlier reports of an imminent deal. It's by far the most expensive acquisition in Apple's 38-year history, a price that the company is paying to counter a threat posed to its iTunes store.

As part of the acquisition, Beats co-founders Jimmy Iovine and Dr. Dre will join Apple, the company said in its official announcement:

Apple is acquiring the two companies for a total of $3 billion, consisting of a purchase price of approximately $2.6 billion and approximately $400 million that will vest over time.

Tweet from Beats by Dre

The growing popularity of music streaming services such as Pandora and Spotify has been reducing sales of songs and albums, a business that iTunes has dominated for the past decade.

Apple Inc. broke into music streaming with the launch of iTunes Radio last September, but the Beats deal is a sign that the service hasn't been a big hit.

Beats launched its streaming service earlier this year to supplement its trendy line of headphones.