Thursday, 19 April, 2018

Apple to Acquire Netflix: CITI Analysts

Citi Apple acquisition targets Citi Apple acquisition targetsMore
Theresa Hayes | 02 January, 2018, 16:37

Analysts Jim Suva and Asiya Merchant peg their prediction on the extra cash that Apple could have on its hands following President Trump's recent tax cut - thereby allowing it to repatriate around $220 billion in cash. As such, the iPhone maker will be able to bring the bulk of its $252 billion cash reserves to the country, which it can use to buy anything it wants.

Citi analysts Asiya Merchant and Jim Suva note that the tax cut alongside a one-time offer to repatriate the cash global but America-born companies have back into the U.S. could lead to Apple having $220 billion to spend on snapping up other companies.

"The firm has too much cash - almost $250 billion (roughly Rs. 15.9 lakh crores) - growing at $50 billion (roughly Rs. 3.18 lakh crores) a year". This problem is a good one to have, said the analysts and Apple has historically avoided repatriating cash to avoid the high taxes. The tax cut paves the way for Apple to bring its massive pile of cash stored in foreign jurisdictions to the United States.

With more than 90% of all its available cash overseas, a one-off 10% repatriation tax would net Apple about $220 million for buybacks or mergers and acquisitions.

Other potential takeover targets include Disney, Tesla, Activision, and Electronic Arts, the analysts noted.

A bid by Apple to acquire Netflix will rest upon an ability to bring its surplus cash from overseas back into the US following the tax cut that was approved in Congress. He has also suggested that there was a chance of a Disney acquisition - although this was prior to Disney's acquisition of Fox's studio and TV assets.

Citi analysts say that there is a 40% likelihood of Apple acquiring Netflix.

The report points out that Apple has already hired top Hollywood talent Sony duo Jamie Erlicht and Zack Van Amburg to lead its Hollywood push and is reportedly developing a new TV show that will star Reese Witherspoon and Jennifer Aniston.

In August, a report said that Apple was planning to spend approximately $1 billion to create its own streaming content for customers.

Well, this sums up for the possibility of two big brands from two exclusive industries of today's world. It might just turn out to be a "merge made in heaven" for the tech giant!