Apple has sealed its biggest ever acquisition with the $3bn purchase of Beats Electronics, a deal that reshapes the music landscape and gives the company new heft in digital streaming.

News of the deal stunned music and technology watchers when it was first reported earlier this month by the Financial Times, because it broke with Apple’s long-standing convention of developing its technology in-house.

However, Tim Cook, Apple’s chief executive, stressed the importance of music to a company that was revived by the success of the iPod.

“It’s all about music,” Mr Cook told the FT at an interview in the company’s Cupertino headquarters, adding that Beats co-founders Jimmy Iovine, the music producer, and Dr Dre, the hip-hop legend, were “kindred spirits”. Mr Iovine and Dr Dre will join Apple as part of the deal.

“We’ve known them a long time,” Mr Cook said. “We’ve gone from dating to going steady . . . now we’re getting married.”

The deal is made up of $2.6bn in cash and about $400m in Apple stock, which will vest over time, and is expected to be completed by the end of September 2014, pending regulatory approval.

Mr Cook stressed the significance to the deal of Beats’ streaming service. Beats launched its subscription service in January with an emphasis on personal music “curation”, rather than on playlists that are selected by using algorithms.

“We’ve got a streaming service that we believe is the first to get it right,” Mr Cook told the FT. “They had the insight that human curation was very important . . . we think they’ve done an A plus job.”

Beats was superior to rival streaming services, he added. “Some of them are no more than a random set of songs put together.”

Founded in 2008, Beats makes most of its money from its speakers and premium-priced headphones, which are beloved by musicians and sports stars, generating revenues in 2013 of $1.1bn.

Mr Cook said Beats’ revenues had increased more than 30 per cent in the first quarter of 2014. Beats Music had attracted more than 250,000 subscribers since its launch in January, he added. Beats Music is only available in the US and lags well behind Spotify, which has 10m subscribers around the world.

Mr Cook said the Beats streaming service would eventually be launched in other markets. “When you combine what Beats has done and what Apple has done . . . what really sends us over the top is what the two companies could do together.”

Mr Iovine said Beats Music would be enhanced and improved by the tie-up with Apple. “It’s only 20 per cent of what we want it to be. How do we get it to the quality we want? That’s Apple.”

The deal has been hailed by the music industry because of the boost it gives to the streaming business model.

“It is the most significant platform transformation that we have had for 30 years,” said Lucian Grainge, chairman and chief executive of Universal Music Group, the world’s largest music company. Subscription streaming generates “high quality, recurring income”, he added., the recording artist and entrepreneur, told the FT the deal was “transformational . . . it redefines our industry”.

Apple has acquired a streaming service as global download sales have dipped for the first time in a decade. “They were starting to lose their edge in the music industry and this makes them the coolest company again,” said Doug Morris, chairman and chief executive of Sony Music.

“This deal is a great thing for the record industry and it will turn out to be amazing for Apple.”

Until now, Apple’s biggest acquisition was the $400m buy of NeXT in 1997, which saw the return of the Mac maker’s co-founder Steve Jobs at a time when it stood on the brink of bankruptcy.

Apple now has more than $150bn in its cash reserves but faces slowing revenue growth. The purchase represents a huge premium over the $1.8bn valuation of Beats less than a year ago, and marks a swift return for Carlyle, the private equity firm which invested about $500m for a 30 per cent stake, said one person familiar with that deal.

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