Apple Likely to Acquire Netflix, Say Citi Analysts
Jan 03 2018
"As reported by Business Insider, Suva and Merchant told clients, "[Apple] has too much cash-nearly $250 billion-growing at $50 billion a year. This money is now being stored overseas, but Apple will have an opportunity to move the cash back to the United States without suffering extensive tax penalties. Suva and Merchant estimate the deal would cost the company about a third of the cash freed up by Trump's tax plan, leaving Apple with plenty of assets to develop further content for the platform should they acquire it. Apple, which is sitting on a massive cash pile of $252 billion that is mostly outside the USA, would need to spend only a third of that cash to buy Netflix. Regardless of these mixed emotions, there is a high likelihood that Apple will buy Netflix in 2018 according to Citi analysts. The tax cut, as well as a one-time allowance for companies to repatriate cash held overseas without a major tax fee, could open up Apple's path to buy new companies. Apple has a vault of money that it uses to purchase other interesting companies that make business sense.
According to Citi, Apple's second most likely acquisition target is Disney at around 25% probability; however, the investor note was written before Disney announced its Fox acquisition. They also said there was only a slim 10 percent change of Apple going after game producers, including Electronic Arts, Take-Two and Activision. Let us know below.
In August, a report said that Apple was planning to spend approximately $1 billion to create its own streaming content for customers. Its iTunes, though a massive hit initially but soon the likes of Netflix, Hulu, and Amazon have gained more viewers.
A tie-up between Apple and Netflix would give the iPhone maker stronger reach among Netflix's 109.3 million subscribers worldwide and a bigger content library, including popular original series like "Stranger Things" and "Fuller House". That money helped Apple lock down an order for a reboot of the Steven Spielberg executive-produced Amazing Stories, as well as a coveted scripted drama about morning TV shows set to star Jennifer Aniston and Reese Witherspoon.
Apple is well known for keeping the majority of its corporate profits outside of USA shores.