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Beats Electronics jettisons HTC for $265 million

As HTC's smartphone line sputtered -- and the Beats addition did little to spur sales -- it became clear that both companies needed out.

Greg Sandoval/CNET

Beats Electronics is once again a completely free company.

HTC announced Friday that it has sold off its remaining 25 percent stake in Beats Electronics for $265 million. The move comes after HTC sold back the other half of its stake in Beats for $150 million.

Things sounded much different two years ago. HTC acquired a 50.1 percent stake in Beats in 2011 with plans to incorporate its audio technology into HTC products. Although it did so, neither HTC nor Beats seemed all that pleased to be working together, leading to rumors that the audio company, started by rapper Dr. Dre and music mogul Jimmy Iovine, might be trying to find a way out. Last month, in fact, a report suggested that Beats was eyeing new partnerships to help it shed HTC.

When the companies struck their deal in 2011, both had high hopes for something major. In fact, rumors suggested that the deal could eventually net HTC $500 million. But as the company's smartphone line declined and the Beats addition did little to spur sales, it became clear that both companies needed out. That's finally happened.

HTC expects the transaction to close by the end of the year.