Analysts reckon there’s a 40% chance that Apple could buy Netflix due to a corporate tax cut granted by US President Trump.
Citi analysts Asiya Merchant and Jim Suva note that the tax cut alongside a one-time offer to repatriate the cash international but America-born companies have back into the US could lead to Apple having $220 billion to spend on snapping up other companies.
“The firm has too much cash – nearly $250 billion – growing at $50 billion a year. This is a good problem to have,” Suva and Merchant told clients according to Business Insider.
“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.”
Apple would only need around a third of that cash pile to buyout Netflix according to the analysts, and given Cupertino has been struggling to make a dent in the TV and video streaming world beyond its hardware offering in the form of Apple TV, acquiring Netflix could be exactly what it needs to have a proper crack at TV and video creation and publishing.
The analysts have a few other companies earmarked for potential Apple acquisitions, notably Disney at around 25% likelihood and game publishers Take Two and Activision at the 10% mark.
But given its previous interest in TV, movies and video content, Netflix is the most likely choice for Cupertino to splash its cash on, providing the streaming giant is willing to sell.
If Apple were to buy Netflix it could spark a tech giant arms race, with the likes of Amazon and Google both looking for ways to shore up Amazon Prime Video and YouTube repetitively to fend off any extra competition Netflix can levy with Apple’s help and the iOS ecosystem.
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