Citigroup analyst Jim Suva issued a note this morning about potential acquisition targets for Apple, should the company be able to repatriate its overseas cash hoard of nearly $250 billion, if President Donald Trump’s tax plan gets approved (via Venture Beat).
Trump’s tax plan of a one-time 10 percent tax (instead of the current 35% tax rate) on repatriated corporate funds would leave Apple with about $220 billion in cash.
“Since one of the new administration’s top priorities is to allow US companies to repatriate overseas cash at a lower tax rate, Apple may have a more acute need to put this cash to use,” explained Suva.
The analyst listed Netflix with a 40 percent chance of being acquired by Apple, followed by Disney at 25 percent, noting how these services would be a good strategic fit for the company. Other potential acquisitions seen as 10 percent or lower were: EA, Tesla, Activision Blizzard, Take-Two Interactive and Hulu.
Tesla CEO Elon Musk claimed earlier this week his company would one day be worth more than Apple, due to their software expertise when it comes to programming robots for automobile production, unrivalled by competitors.
Suva estimates a hybrid approach would be best suitable for Apple, suggesting one-third of the company’s cash be spent on Netflix, while the remaining two-thirds for other larger buybacks, which could increase top-line growth, net income and equity value by 20 percent.
Apple’s capital return program was recently increased by $50 billion, while its share buyback program jumped by $35 billion, along with bumping its quarterly dividend by 10.5 percent.