HTC to drop Beats investment amid falling share price

By Helen Ku  /  Staff reporter, with CNA and Bloomberg

Sat, Sep 28, 2013 - Page 14

Smartphone vendor HTC Corp (宏達電) yesterday said it planned to sell its remaining shares in Beats Electronics LLC back to the firm for US$265 million.

HTC's subsidiary HTC Europe Co Ltd, which currently holds 24.84 percent of shares in Beats, will carry out the transaction next quarter, the company said in a filing to the Taiwan Stock Exchange.

HTC America Holding Inc, another subsidiary, will also receive US$150 million from the California-based audio products and equipments producer, HTC said.

HTC said in the filing that Beats will remain an important partner to the company.

In August 2011, HTC paid about US$309 million for a 51 percent stake in Beats in a bid to attract young consumers. But HTC sold half of that back to Beats in July last year for around US$150 million.

Under this partnership, HTC has rolled out a series of smartphone models bearing the Beats logo. However, due to supply shortage and factors including the lack of an effective marketing strategy against rivals like Samsung Electronics Co and Apple Inc, the firm has been struggling to reinvigorate its sales.

Separately, Carlyle Group LP, the world's second-largest manager of alternative assets such as private equity and property, agreed to buy a minority stake in Beats for an undisclosed price.

Carlyle will work with the management team to continue expanding the brand, Beats said in a statement yesterday.

HTC’s shares closed down 2.99 percent at NT$130 yesterday, as investors feared the company’s efforts to prop up its share price will diminish with its current share buyback program coming to an end in the near future.

HTC announced last month it would repurchase 15 million of its own shares at a price ranging between NT$140 and NT$290 from Aug. 5 to Oct. 4.