LOS ANGELES (CelebrityAccess) — Audio equipment maker Monster LLC has brought legal action against Apple's newly acquired Beats Electronics division, and Taiwanese smartphone maker HTC Corp., alleging that the firms conspired to prevent Monster out of a deal with Beats ahead of Apple's $3.2 billion acquisition of the company.
According to the Wall Street Journal, Monster alleged in a court filing that Beats sold a 51% stake to HTC, for 300 million and then repurchased 25.5% of its own shares from HTC a month later in order to invoke a a change-of-ownership clause in its contract allowing Beats to end its relationship with Monster.
Monster initially partnered with Beats to launch its flagship brand of pricey headphones in 2008 in exchange for licensing rights to the Beats brand and its connection to celebrity marketing by artists and stakeholders such as Dr. Dre.
Monster further contends that its CEO Noel Lee reduced and finally sold his personal holdings in Beats in early 2014 after being mislead by a board member that no “liquidity event” was on the horizon for the next year or two. Lee's 5% stake in Beats would have been worth more than $100 million.
A spokeswoman for Beats declined to comment to the WSJ, and said Mr. Iovine and Dr. Dre weren’t available for comment. HTC didn’t respond to a request for comment. – Staff Writers