The rumors (and Tyrese Gibson’s crazy Instagram video) were true!

Apple just announced that it has agreed to acquire Beats Electronics and Beats Music for a total of $3 billion. That total consists of $2.6 billion and another $400 million that will vest over time. Beats co-founders Jimmy Iovine and Dr. Dre will join Apple. The agreement is subject to regulatory approval and is expected to close in Apple’s fiscal fourth quarter.

Apple hasn’t said exactly what it’s got planned for Beats, but CEO Tim Cook did explain that music is an important part of everyone’s lives and that it’s special to Apple. As a result, Cook says that Apple is teaming up with Beats so that it can “continue to create the most innovative music products and services in the world.”

So why did Apple buy Beats? Only the execs from the two companies know for sure, but there are a couple of possibilities. Apple could build upon the existing Beats Music streaming service to create an improved version of the service that it calls its own. Meanwhile, the Beats Electronics name could help Apple to gain some style points with consumers, many of which see the “Beats” brand as being cool.

For now we can only speculate about what Apple has in store for Beats. However, it’s worth noting that WWDC 2014 kicks off next week, so it may not be long before more details are revealed.

Why do you think that Apple bought Beats Electronics and Beats Music?

UPDATE: Financial Times employees Tim Bradshaw and Matthew Garrahan have shed a bit more light on the Apple-Beats deal. Apple CEO Tim Cook told FT that Beats Music will still be available on Android and Windows Phone after the acquisition closes, saying that “it’s all about the music.”

Cook went on to tell the FT that he views Beats as the best streaming service available now. “It’s the first to get it right,” Cook explained.

Via Apple, @Tim, @MattGarrahan