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Beats ends HTC partnership after buyout

The partnership between Beats Audio and HTC is officially over.

The audio firm has announced that The Carlyle Group will make a minority investment in Beats, which will allow Beats to reacquire the minority stake that HTC currently has in the firm for $265 million (£164 million).

"These transactions represent the evolution of the financial strength and significant growth prospects of Beats," Beats co-founder and CEO Jimmy Iovine said in a statement. "Carlyle is a fantastic investment partner and we look forward to building the next chapter of Beats."

"We are confident that Beats will continue to drive innovation and growth in the premium audio accessory market, particularly as the proliferation of smart phones and tablets stimulate increased consumption of digital media," said Sandra Horbach, Carlyle's managing director.

In its own statement, HTC said it will also receive the repayment of a $150 million (£92.9 million) promissory note plus accrued interests. The deal is expected to close in the fourth quarter of 2013.

"Over the past two years, HTC and Beats have enjoyed a solid business partnership in delivering superior mobile audio experiences for consumers worldwide," HTC said. "HTC and Beats will continue to partner as future opportunities arise."

HTC talked up its BoomSound technology, which is available in the new HTC One. "Our partnerships in building quality into our products will also evolve as we rely on different components and solutions to support our innovation," the company said.

Rumours about an end to the Beats-HTC partnership emerged in August. Beats, which makes the Beats by Dr. Dre headphones, reportedly wanted to buy out HTC's stake in the firm so that it could team up with new investors and branch out beyond headphones.

The deal between Beats and HTC dates back to August 2011, when HTC announced a strategic investment and partnership with Beats valued at a rumoured $300 million (£185.9 million), which included a line of Beats-enhanced HTC devices. By July 2012, however, Beats bought back half of HTC's shares in the company to give itself a 75 per cent ownership instead of a 50/50 split with HTC.

Beats has plans to expand beyond hardware. In January, it announced plans to launch a rebranded version of the MOG streaming music service it acquired last year.

HTC, meanwhile, has struggled in the smartphone market against Apple and Samsung. It newest flagship device, the HTC One, was received positively by critics, but the firm has yet to make a significant dent in a market dominated by Samsung Galaxy devices and the iPhone.

Image credit: Flickr (Average Joes Blog)