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(Updates with comment from analyst in fourth paragraph.)
Aug. 11 (Bloomberg) -- HTC Corp., Asia’s second-largest handset producer by market value, agreed to buy control of a maker of headphones backed by rapper Dr. Dre for $300 million.
The Taiwanese company will acquire 51 percent of Beats Electronics LLC, HTC Chief Financial Officer Winston Yung said today. U.S.-based Beats Electronics, formed in 2006 by Dr. Dre, also known as Andre Young, and Universal Music’s Interscope Records Chairman Jimmy Iovine, makes headphones that sell for as much as $600.
The purchase paves the way for the Taiwanese smartphone maker to expand its offering of accessories as competition in the smartphone market escalates. HTC last month agreed to buy S3 Graphics Co. for $300 million to access its trove of patents as it defends against infringement lawsuits from Apple Inc.
“HTC is trying to beef up its audio and earphone products,” Richard Ko, an analyst at KGI Securities Co., said by phone from Taipei today. “This will help stop further erosion of the average selling prices” of the company’s products. Ko reiterates his “outperform” rating and a 12-month price estimate of $1,080 on the stock.
Demand for phones with touchscreens and faster fourth- generation connectivity is helping HTC generate record sales as it closes in on Nokia’s No. 3 position in the global smartphone market after Apple and South Korea’s Samsung Electronics Co. The gains have helped Taoyuan, Taiwan-based HTC amass a cash pile of NT$108.4 billion ($3.7 billion) as of June 30.
HTC fell 2.6 percent to NT$799 at 11:26 a.m. in Taipei, while the island’s benchmark Taiex index lost 0.3 percent.
--Editors: Mike Tighe, Dave McCombs
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