Beats buys back remaining shares from HTC for $265 million
HTC Corp, the Taiwanese smartphone manufacturer, is selling it’s remaining 24.84% stake in Beats Electronics LLC for $265 million. HTC originally bought 50.1% stake in Beats for $300 million back in 2011 which Beats bought back half of the majority shares for $150 million last year. Apparently, the partnership has turned sour. Sources reported there were disagreements over strategy and investment direction.
“For HTC it puts more cash in the bank, and they need cash now that they have turned operating cash flow negative,” said Jean-Louis Lafayeedney, a Hong Kong analyst. Recently, HTC has been struggling to gain smartphone market share with the company heading towards its first quarterly lost since its initial public offering in 2002.
HTC’s share of the global smartphone market fell to 2.8 percent in the second quarter according to Bloomberg. Despite sales declining, HTC enlisted actor Robert Downey Jr. to promote its smartphone brand in a two-year global marketing deal worth about $12 million.
On the other hand, Beat’s revenue has been strong and the planned investment from Carlyle Group would value the company at more than $1 billion compared to around $600 million two years ago.