Apple in talks to buy Dr Dre's Beats headphones firm for $3.2bn

Beats Music, as it is known, is a paid-for subscription service similar to Spotify, so would allow Apple to continue operating iTunes Radio, which is free.

Meanwhile, Apple could team up its own modestly-priced headphones business with Beats’ high-end range. Beats controls 27pc of the $1.8bn headphone market and 57pc of the market for “premium” versions, despite its products selling for hundreds of pounds each. It also reaches consumers through partnerships with Chrysler, Hewlett Packard and HTC.

A multi-billion-dollar deal would dwarf the $404m Apple spent in 1996 to buy computer company NeXT, which ranks as its biggest to date. It would also be a substantial increase to the $1bn Beats was valued at just eight months ago, when asset management firm Carlyle Group took a minority stake for $500m.

Earlier this year Tim Cook said that Apple, which is sitting on a $133bn cash pile, was not against agreeing deals for large sums of money.

“We have no problem spending 10 figures for the right company, for the right fit that’s in the best interest of Apple in the long-term. None. Zero,” he said.

Apple and Beats did not return calls for comment.

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