Forbes reported today the Caryle Group has made a $500MM investment in Beats Audio. For those of you who are unfamiliar with the Caryle Group, they are one of the original big dogs of private equity. KKR, Blackstone Group, and Carlye Group would be my top three. What the Caryle Group actually purchased with that $500MM is not disclosed. Its probably a small equity portion and the rest is debt.
The valuation here is interesting though. On the Private market Beats Audio is being valued at just over a $1B with just over $1B is sales too. Basically a P/S ratio of 1, give or take a little. Skullcandy however is trading just .68x P/S.
This is also good news for Skullcandy. The Caryle Group dues their due dillegence and they noted they see the need for headphones growing strong over the next years. Citing the growth of smart phones and laptops. This can only be good stuff for Skullcandy.
Beats has a spotty patch with investment partners. First the battle they had with Monster and the scars they left there. Then came HTC and nothing really came of it. They were business partners for 2 years and then Beats started buying their stake out. It will be interesting to see how it works out with the Caryle Group