Top private equity firm, Carlyle Group, gave Beats Electronics $500 million Friday valuing the company at $1 billion. In exchange for growth capital, it will be taking two of six positions on the high end sounds and audio tech company's board.
The money will be used to buy back HTC's final twenty five percent stake in the company, ending a partnership that did not go quite as planned. The Taiwanese smart phone company bought half of Beats three years ago for $309 million dollars, and used the technology in its smart phones. As its cell phone sales have since far lagged behind Samsung, it has moved to sell its holdings in its partner, in order to focus on its most important business segment.
Beats has started to expand into the speaker business, revealing a new line of pill speakers marketed in notable pop songs "Blurred Lines" by Robin Thicke and "We Can't Stop" by Miley Cyrus. It has already captured sixty four percent of the premium headphone market, and has put its technology into Hewlett-Packard's computers. On track to made $1.2 billion in revenue this year, the infusion of capital will allow the company to take the next step in separating itself from its competitors.
Beats is banking on the continued growth of social media use and the smart phone industry. As it looks to become the innovative leader of audio accessories, it believes that the growth in tablet and digital audio use will allow its own growth to continue.
The Caryle Group's investment shows the trust it has in the financial strength, brand, and growth prospects of Beats Electronics. The next wave of Beats premium headphones should hit the market with a splash.