After a month full of speculation, Apple (NASDAQ:AAPL) officially announced its acquisition of Beats in a $3 billion deal. Of that, $2.6 billion will consist of cash, with the remaining $400 million in stock that will vest over time. The deal is expected to close before September. Music has always been instrumental to Apple's success, which is why the company says its acquiring the headphone maker.

In the past, Apple acquisition targets have fit within a specific profile. They generally have innovative technology that can be integrated into future products, generate negligible revenue relative to Apple's top line if it decides to shutter operations, typically do not have strong consumer brands, and cost $500 million or less. Beats is none of those things, which is why this deal has garnered so much attention.

Apple is paying an estimated 2 times sales for the deal, which isn't entirely unreasonable given the talent that it is acquiring. There is also potentially some innovative technology behind Beats Music curation, which would have obvious implications for iTunes Radio.

In this segment of Tech Teardown, Erin Kennedy discusses Apple's big buy with Evan Niu, CFA, our tech and telecom bureau chief.