Apple’s Potential Takeover Targets Include Tesla, Netflix Says Citigroup Analyst

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.

Founder and Editor-in-Chief of iPhoneinCanada.ca. Follow me on Twitter, and @iPhoneinCanada, and on Google+.

  • Geoffrey Spencer

    If I was Apple, I would look at Amazon too. Amazon could take over the iBooks division from Apple, ditch Kindle Fire for iPads, Apple Stores could be Amazon Prime drop-off points and Amazon Grocery Stores could have Apple Stores in them, Apple customers would have access to the Amazon Prime Video library and do not forget AWS with iCloud. For services, Apple should focus on either Netflix or (and??) Amazon and maybe Disney. Forget Hulu because they are limited to the U.S. only. I would also go after Tesla. $US250 billion can buy a lot for Apple and they need to diversify from iDevices to services (Netflix and Amazon) and the future technology like Tesla, AR and VR.

  • My bet would be on Tesla. Would save Apple time for their automotive plans.

  • Geoffrey Spencer

    I agree with what you are saying. Be honest though. Can you see Elon Musk ever selling Tesla? He might if he is having money flow problems but I have not read that anywhere. Apple really does need to diversify into services and future tech. Musk might go for a partnership. Tesla takes care of the hardware (car, battery) while Apple take care of the software and the UI. That might be possible. Each playing their strengths.

  • Many99

    Maybe if they would to buy Hulu they can expand it to more countries I can used it without a vpn

  • Musk is unpredictable, I do think he would sell if the price was right and he was able to continue his plans for sustainable cars and homes.

  • Geoffrey Spencer

    It is more to do with content rights and the major networks in Canada have most of the rights and will not be sharing them anytime soon with Apple.

  • Many99

    I agree on the content rights and networks, but maybe with Apple with its power and money it can force Rogers, Bell and networks hand to get out of the way or else