Carlyle teams up with rapper Dr Dre through ‘$500m’ Beats headphones investment


Dr Dre BeatsThe Carlyle Group has picked up a minority stake in Beats Electronics, the headphones maker co-founded by legendary rapper Dr Dre, in a deal thought to value the business at more than $1bn.

Carlyle paid about $500m for the stake according to the Wall Street Journal, which cited people familiar with the matter.

Taiwanese company HTC revealed it has agreed to sell its 24.84 per cent stake in Beats back to the US company for $265m.

Carlyle said it expected the deal to close in the fourth quarter.

Dre and music mogul Jimmy Iovine launched Beats, which sells top-end branded headphones, in 2008 as a backlash to what they considered was poor sound quality from cheap headphones bundled with MP3 players, laptops and other portable devices.

The company currently controls almost two-thirds of the market for $100-plus premium headphones in North America according to data from NPD Group.

Carlyle Managing Director and Head of Consumer and Retail Sandra Horbach said, “We are confident that Beats will continue to drive innovation and growth in the premium audio accessory market, particularly as the proliferation of smart phones and tablets stimulate increased consumption of digital media.

“Carlyle has a strong history of helping great brands expand globally, and we are thrilled to partner with Jimmy Iovine, Dr. Dre and their talented management and product teams.”

The firm said that equity for the deal had come from its Carlyle Partners V fund, which closed on $13.7bn in 2007.

Carlyle is currently nearing the end point for raising the successor to that fund, and recently raised the hard cap to $12.5bn after pushing past its initial $10bn target.

The firm expects to hold a final close around November 22 according to the Wall Street Journal, which cited people with knowledge of the matter.

Copyright © 2013 AltAssets