Has Apple acquired Beats? The announcement has been rumored for this week but so far we have yet to hear anything. The question is, even if it did happen, will we learn about it? In a report by AppleInsider, it seems that even if the deal were to be finalized this week, there is a good chance Apple might not announce it.
They are basing this on SEC rules which allows companies to choose whether they want to disclose their acquisitions, although this will depend on certain criterias, such as how significant the acquisition is to the company. This is based on how close in size is the acquired company to its acquirer.
In this case, Beats is definitely not as close to Apple in terms of size, which is why if Apple chose to, they might not disclose their acquisition. As it stands, Beats is a private company so not much is known about their financial situation, although some have roughly estimated that they bring in about $1.5 billion in revenue per year.
The SEC determines significance if pretax income in greater than 10% of the pretax income of the acquirer. In this case, Beats’ $1.5 billion pales in comparison to Apple’s $50 billion. Also with Apple’s size and the cash pile they are sitting on, the rumored $3.2 billion they’re willing to pay for Beats will seem pretty small in comparison.
In fact Apple’s CEO, Tim Cook, did address the idea of disclosing acquisitions during the company’s last quarterly earnings call, where he was quoted as saying, “And so you can bet that you will continue to see acquisitions and some of which we’ll try to keep quiet and some of which seems to be impossible to keep quiet.” However there have been talks that Apple could introduce both Jimmy Iovine and Dr. Dre on stage at WWDC 2014, so if nothing is announced now, perhaps it will be announced then.