Apple has ended weeks of speculation by confirming a $3bn deal to acquire music-streaming service Beats Music, and Beats Electronics, which makes the Beats headphones, speakers and audio software.
The deal is aimed at boosting Apple’s music business as sales in iTunes have levelled off and growth has stalled, according to Business Insider.
Despite being an early pioneer of digital music, Apple is facing increasing competition from subscription services such as Spotify, Pandora and Rdio.
Apple chief executive Tim Cook said the deal would allow the firm to "continue to create the most innovative music products and services in the world".
In a statement, Apple said it is paying an initial $2.6bn for Beats, and $400m "that will vest over time".
As part of the deal, Beats co-founders Jimmy Iovine, a music producer, and hip-hop star Dr Dre will join Apple, which described the pair as “sound pioneers, artists and entrepreneurs”.
“The idea when we started the company was inspired by Apple’s unmatched ability to marry culture and technology,” said Iovine.
The addition of Beats will make Apple’s music lineup even better, said Eddy Cue, Apple’s senior vice-president of internet software and services
“From free streaming with iTunes Radio to a world-class subscription service in Beats, and of course buying music from the iTunes Store as customers have loved to do for years,” he said.
Apple hopes to tap into the success of Beats, which has quickly become part of pop culture in the US.
The company also plans to make the Beats product lineup available in many more countries through the Apple’s retail stores, the online Apple Store and selected Apple Authorised Resellers.
Subject to regulatory approvals, Apple expects the transaction to close in fiscal fourth quarter, the company said.
Read more on Apple