No doubt Apple put a very lucrative offer on the table, but another route could have been for the author to dual-license the code - GPL it so the community benefits, while any improvements he can then push out in his app which he continues to sell.
My guess is that Apple values his underlying algorithm implementation, not his app. The implementation seems highly architecture specific and tuned for certain ARM processors.
It seems like Apple might replace their iOS JPEG implementation with his, and all developers on iOS will benefit from the very fast image encoding routines.
No doubt Apple put a very lucrative offer on the table, but another route could have been for the author to dual-license the code - GPL it so the community benefits, while any improvements he can then push out in his app which he continues to sell.