Apple buy could make Dr. Dre rap's richest man

The Beats acquisition will likely increase the artist's net worth to around $800 million, surpassing current leader Diddy by $100 million.

By MSN Money Partner May 9, 2014 11:50AM
Credit: © Phil McCarten/Invision for ASCAP/AP Images

Caption: Dr. Dre at the ASCAP Rhythm & Soul Music AwardsBy Zack O'Malley Greenburg, Forbes

Dr. Dre leapfrogged Jay Z in Forbes' latest rankings of hip-hop's richest artists, claiming the No. 2 position as his net worth soared to an estimated $550 million. 

Now, it looks like the Beats cofounder (pictured) could lay claim to the top spot in a matter of days.

Late Thursday night, The Financial Times reported that Apple (AAPL) was in talks to buy Beats for $3.2 billion; the deal would be the computer giant's largest acquisition ever. 


Dre's stake in Beats currently stands at somewhere around 20 percent to 25 percent; we valued the company at $2 billion in our latest round of estimates.


A sale for $3.2 billion would nearly double the value of Dre's holdings, though capital-gains taxes could take a bite out of his big payday, likely leaving him with a net worth in the neighborhood of $800 million.


It's not quite enough to land on the Forbes 400, but it would easily make him hip-hop's richest man, topping current champion Diddy by $100 million.


"Beats has a unique brand -- it speaks to a nice young demographic, which is really interesting to marketers," said Peter Csathy, former president of Musicmatch, an early digital music purveyor acquired by Yahoo (YHOO) in 2004 for $160 million. "When I think about Beats, I think about it as a lifestyle, I think of it as a media company, not just a hardware and music-focused company."


The value of that brand would also make a handful of other wealthy entrepreneurs even wealthier if the Apple deal goes through. Beats recently raised $60 million in funding from current investors including Dre, cofounder Jimmy Iovine and billionaire Len Blavatnik, via his company Access Industries.


A sale would also nix the possibility of a Beats IPO, which some speculated could be in the offing after the company hired chief financial officer An De Vooght, who spent 16 years in a similar role at Red Bull after stints at Sony (SNE) and Price Waterhouse, in March.


Apple's Beats buyout is still not official, and could certainly fall through. In the meantime, though, Dre appears set to break new ground in the business of music yet again.


More from Forbes




3Comments
May 9, 2014 2:38PM
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For those who don't get this proposed AAPL buy, I'll quote from those sages, Mimi Castillo & company, who asked the immortal question, "What is hip?" (Tower of Power, circa 1973).  AAPL can afford to buy what it wants, and if an influx of hipness is what they want to buy, then yes, "hipness is what it is," again quoting the same great Oracle of Oakland.
May 11, 2014 11:14AM
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Now THERE is a worthy achievement. Not.
May 9, 2014 11:09PM
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Apple is losing its edge so they had to go out and buy something to bring it back to the young crowd.  The iPhone was becoming too dated and non intriguing. When grandmas buy your product, it's not cool anymore.....I don't see any grandmas buying Beats lol. iTunes is a has-been because streaming is the way to go. Beats will be a good acquisition because Apple is in dilemma when it comes to product development. Plus...they're RICH!!! Have fun spending all of that cash!
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