Once 2018 has started, there have appeared many speculations that Netflix may be purchased by Apple. In the last decade, Apple has literally been sitting on cash piles, without a clue where to invest available funds. The world’s largest corporation (by market capitalization) tends to be the only company that is able to purchase such a video streaming giant as Netflix, as many analysts believe.
Market analysts assume that the purchase of Netflix by Apple in 2018 may occur with a probability of around 40%. However, many fans of Netflix have no opinion about whether such an acquisition would be good or bad for the company. But regardless of their wishes, analysts from the Citibank Group assume that the probability of the fact that Netflix may be purchased by Apple is quite a high one, amounting to 40%. The analysts noted that such an acquisition is possible due to the tax rate cuts, proposed and implemented by the US President Donald Trump.
With a probability of 40% Netflix may be purchased by Apple
Analysts from the Citibank counted that such a tax rate cut could allow the world’s largest corporation to return more than $220 billion from the offshore. In order to acquire Netflix, the offspring of Steve Jobs should spend just a third of that sum. Previously, Apple was sitting on a cash pile of $252 billion, accumulated in foreign countries. It was impossible to bring that capital to the United States without a solid tax cut.
The research of the Citibank’s analysts suggests that with such funds available, Apple will necessarily be looking for the companies to acquire. And they think that Netflix will be in among the first companies to be considered. That research was published before Disney acquired the Fox Studio and its TV assets. According to that paper, the likelihood of Apple purchasing Disney varied between 20% and 30%.
What makes Apple wish to acquire Netflix? Well, the company has strived for years to create a decent service of movie streaming in order to beat Amazon, but has failed to do it so far. In particular, the company tried to do it with its own market iTunes, but it had little success. Considering that this corporation has, indeed, quite deep pockets, the company’s management may take a decision to buy out Netflix. Especially as this company is known for its original series, such as the famous “Stranger Things” and “Stranger Thing II.”
The analysts of Citibank say that Apple adds around $50 billion of cash more every year. And, as they point out, spending that money tends to be quite a problem. Previously, Apple avoided to bring those money home due to the high tax rates. Considering that 90% of the Apple’s funds are held abroad, the one-time repatriation tax would cost around $22 billion (10%) for the company, leaving it with around $230 billion for mergers and acquisitions.
Besides, you can find out about the new Netflix releases in January here.