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 / Updated  / Source: CNBC.com
Beats headphones are sold along side iPods in an Apple store in New York City. Apple is buying Beats for $3 billion.Andrew Burton / Getty Images file

Apple, which revolutionized the music industry over a decade ago with the iPod, is buying headphone maker Beats Electronics for $3 billion in a deal that will help it compete in the streaming music business.

The deal, the largest in Apple's history, is expected to close before the end of September. Apple said on Wednesday it will pay $2.6 billion in cash and another $400 million that will vest over time.