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Analysts Say There is a 40% Likelihood of Apple Acquiring Netflix

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Now that the Congress has passed US President Trump’s corporate tax cut, which would allow Apple to finally bring back its $252.3 billion foreign cash pile without a major tax hit, it will give the iPhone maker a much larger cash warchest to buy new companies. According to Citi analysts Jim Suva and Asiya Merchant, there’s a 40% likelihood of Apple using that money to acquire Netflix (via Business Insider).

Apple manda

While ranking potential Apple mergers and acquisitions (M&A) targets in a recent note to clients, Suva and Merchant marked Netflix as the company Apple would be most likely to buy. The analysts believe the Cupertino tech giant would need only one-third of its cash reserves to buy Netflix. The note was written before Disney’s acquisition of Fox’s studio and TV assets. But prior to that event, Citi gave an Apple-Disney tie-up a 20-30% chance.

“The firm has too much cash – nearly $250 billion – growing at $50 billion a year. This is a good problem to have,” Suva and Merchant told clients. “Historically, Apple has avoided repatriating cash to the US to avoid high taxation. As such, tax reform may allow Apple to put this cash to use. With over 90% of its cash sitting overseas, a one-time 10% repatriation tax would give Apple $220 billion for M&A or buybacks.”

Activision and Electronic Arts are also among the potential M&A candidates, although the likelihood of Apple acquiring them is 10% or less.

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  • Kris

    This would be bad for everyone but Apple. If this were to happen can see them eventually locking Netflix exclusively into Apple devices and removing it from everything else. They should give their shareholders a big dividend with the cash instead. Now they can also invest more in the U.S. economy. Since Trump’s new tax bill has allowed them to finally repatriate all of their European cash horde that they’ve been amassing for years (using double Irish tax structure tactics to unethically evade paying U.S. corporate taxes) he should be insisting that Apple make more investments in the American economy (build more American factories etc) in return.

  • William

    Why does anybody think having factories in the US is a good idea? Would you spend $2,800 on an iPhone???

  • Kris

    FYI they already have some American factories. Also note that I didn’t say that *I* thought it was a good idea… More like Donald Trump would likely think it was a good idea (especially since he’s letting them finally repatriate all of that tax-evading cash from Europe). Apple’s been pressuring the U.S. government for a tax holiday like this for *years*. And Trump’s already mentioned Apple as an example of a big American company who he thinks should have more American factories. Also Apple’s been getting all the benefits of being an American company without paying their fair share of American taxes (i.e. such as having a virtual head office that technically only exists on paper). The American public are the ones who should be outraged that their corrupt politicians and badly out-of-date tax code allow for tax evasion loopholes like this. Now the same politicians are the ones allowing them to bring back all of that ill-gotten cash.

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