Experts Predict 40% Chance That Apple May Buy Netflix – Find Out Why!
Apple would achieve two objectives with this acquisition; get excellent on-demand entertainment content and get their overseas money back in the US.
Mergers and acquisitions can literally change the business landscape, and introduce something new, something never seen before.
However, when it comes to world’s most valuable company: $752 billion worth Apple and world’s largest and biggest on-demand entertainment platform Netflix which is currently worth $77 billion and having 100+ million users all over the world; then things become even more interesting.
Right now, rumours are going around that Apple can acquire Netflix any moment now; and financial analysts from reputed firms have predicted 40% chance that it may happen in 2018.
Apple acquiring Netflix would be the biggest M&A of 2018; but the question which arises: Why?
Apple is a hardware company, selling gadgets and Netflix is an on-demand entertainment hub, offering movies, TV shows on your mobile, laptop and TV.
What is the connection here?
The Reason Why Apple May Acquire Netflix!
And, the reason is tax money and President Trump.
Last year, US President Trump indicated that GOP Tax Plan, or Tax Cuts and Jobs Act would be approved in 2018, which will give companies like Apple and Microsoft only one chance to bring back their money hidden overseas.
Now, what can be the best way to use this opportunity and bring back billions of money stashed abroad?
An acquisition. And that too of Netflix, because Apple is right now struggling to get hold of the on-demand entertainment segment, losing out to Amazon and Netflix on a massive scale.
Right now, Apple has approximately $250 billion in various overseas accounts, and an acquisition of Netflix will only need $78 billion, which is almost one-third of that amount.
Once Netflix is acquired, Apple can bring back their entire war-chest of money into the US, and use that money to further fuel their mergers and acquisitions programs.
Double hit with a single stone.
When Will Apple Acquire Netflix?
Experts from Citi Bank says 40% probability exists, that this major acquisition will happen this year itself.
If we believe Citi analysts Jim Suva and Asiya Merchant’ notes to their clients, which became public recently, then even Disney can be acquired by Apple, but for that, they have only a 20-30% probability. Besides, hold-your-breath: Tesla is also on the radar.
In their note to the clients, they said,
“The firm (Apple) has too much cash – nearly $250 billion – growing at $50 billion a year. This is a good problem to have. 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.”
Netflix or Apple has refused to comment on this development.
We will keep you updated as we receive more inputs.