Last August, HTC bought 50.1 percent of Beats Electronics for $309 million. However, just shy of one year later, HTC has sold back half of its stake in Beats Electronics to the company’s co-founders, music producers Dr. Dre and Jimmy Iovine, for $150 million.
The sale “provides Beats with more flexibility for global expansion while maintaining HTC’s major stake and commercial exclusivity in mobile,” HTC’s said in a statement.
HTC’s decision has been met with some concern. “We find HTC’s announcement of cutting back its investment in Beats puzzling,” a Morgan Stanley analyst said in a research report. The financial institution questions the benefits of HTC’s dealings with Beats Electronics from the initial acquisition to the company’s recent disposal of shares.
“Reducing its holding to 25.57 percent signals HTC’s separation from Beats’ operations,” the firm said. “Possibly it implies that there was not much synergy between the two companies from the beginning.”
In addition to announcing the sale of its shares in Beats Electronics, HTC released a statement in which it said it has agreed to lend Beats $224.85 million for one year, with interest.
HTC has struggled to compete with Samsung’s Galaxy smartphones and Apple’s iPhone, and hoped that a partnership with Beats would help give its mobile product line more of a competitive edge. Unfortunately, this venture doesn’t seem to have panned out for the Taiwanese phone maker. The company said that it will still have exclusive rights to including Beats Audio technology in future handsets, however.
[via: Yahoo Finance]