In the wake of the Disney-Fox deal having gone down last month, many have speculated as to what would be the likeliest next acquisition of one giant entertainment conglomerate by another.
A common answer was that of Apple acquiring Netflix for around $50-75 billion. Apple has $252 billion in overseas funds reserves, growing at $50 billion annually, and with President Trump’s newly passed corporate tax cut they have a one-time allowance to repatriate cash stored overseas without a major tax hit.
Effectively they’ll soon have a LOT of money available and a need to spend it. As a result, analysts for Citi now claim that the chances of that acquisition taking place have reached a quite high 40% according to Business Insider. Analysts Jim Suva and Asiya Merchant tell clients:
“The firm 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.”
There’s room for doubt though. Apple recently committed $1 billion towards creating new shows, and their largest acquisition to date was buying Beats for $3 billion in 2014. There’s also been no reports of talks between the two companies at this time beyond a rivalry in original programming in which Netflix is easily far ahead of Apple.