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Beats Receives Reported $500 Million Investment From Carlyle Group, Buys Out HTC

Beats studio headphones 2013 L

“These transactions represent the evolution of the financial strength and significant growth prospects of Beats,” Jimmy Iovine said in a statement.

Beats Electronics LLC (Beats), the audio brand co-founded by Dr. Dre (Andre Young) and Interscope Geffen A&M Chairman Jimmy Iovine, announced that the Carlyle Group had agreed to make a minority investment in the company. Though terms of the deal were not disclosed, Bloomberg and the Wall St. Journal put the Washington-based private equity firm’s investment amount at $500 million, valuing the company at over $1 billion.

At the same time, Beats announced that it had entered into a definitive agreement to re-acquire the minority stake held by HTC Corp., a 24.84 percent stake for $265 million.

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“These transactions represent the evolution of the financial strength and significant growth prospects of Beats,” Iovine, Beats CEO, said in a statement. “Carlyle is a fantastic investment partner, and we look forward to building the next chapter of Beats.”

The Carlyle Group, which Private Equity International ranked as the second largest private equity firm in the world and is known for its association with powerful political figures, has $180 billion of assets under management as of June, 2013. The deal with Beats, which is expected to close in the fourth quarter, is thought to help the company expand its reach internationally.

“Carlyle has a strong history of helping great brands expand globally,” Carlyle managing director and head of consumer and retail Sandra Horbach said in a statement.  “And we are thrilled to partner with Jimmy Iovine, Dr. Dre and their talented management and product teams.”

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According the Wall Street Journal, Beats is working on expanding its senior management team, which currently comprises  Iovine, Mr. Young and Luke Wood, its president, and is likely to announce some new appointments in the coming weeks, according to people familiar with the matter.

The investment does not impact Beats Music, which spun off earlier this year and is in the process of beefing-up its Beats Music streaming service, set to launch later this year. In March, Beats Music received a $60 million investment from a consortium led by Access Industries, Len Blavatnik’s investment group, which owns Warner Music Group.

Beats confirmed the Carlyle investment but declined comment for this story.