Founded by rapper and producer Andre Young (aka Dr. Dre) and music mogul Jimmy Iovine, Beats Electronics is a key vendor in the premium headphone market. Apple reportedly began talks to buy the company in early May. Both Young and Iovine will join Apple as part of the deal.
"Iovine and Dre are kindred souls of Apple," Apple CEO Tim Cook told CNBC in an interview.
Beats' profit margins in the headphone market may be substantial. A pair of its high-end headphones retail for as much as $450, but production costs across the brand run only about $14 a pair, according to The New York Times. Apple said the deal would add to earnings in fiscal 2015.
Read MoreNot just about headphones as Apple bets on Beats Music
Beats also recently entered the streaming music business—placing it in head-to-head competition with much larger veteran rivals Pandora and Spotify.