Los Angeles, CA, United States (4E) – Beats by Dr. Dre is looking to move into the speaker and audio system business without the help of manufacturer HTC. Beats Electronics founders rapper and producer Dr. Dre and music bigwig Jimmy Iovine seek to buy out HTC’s 25 percent stake in the company.
The business expansion planned by Beats Electronics include an online streaming music service and consumer electronics.
Dr. Dre and Iovine own and control a combined 75 percent of the company. Just two years ago, Beats by Dr. Dre was worth $200 million. Now, the company has an estimated value of $1 billion. It has popularized premium headphones, which sell for about $200 to $400.
The headphones by Beats exploded when it rode the mainstream success of smartphones and tablets. The company currently owns 59 percent of the premium headphone market in the United States. That same market increased by 18 percent this year and includes headphones and earphones that have a $99 price tag or more.
Beats Electronics wants a new investor that could take HTC’s stake in the company. But investors are wary and want to determine first if the premium headphone market is here to stay or merely a trend.
“They also were concerned by the aggressive terms Beats was seeking, including a structure that would place few restrictive covenants on the junk-rated company and whether a large portion of the money raised could be used to pay a dividend to its owners,” the Wall Street Journal added.