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Analysts Foresee 40% Chance of Acquisition of Netflix by Apple

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Published on : Jan 02, 2018

A recent analysis has prognosticated close to a 40% chance of Apple acquiring Netflix after the corporate tax cut passed by U.S. President Donald Trump. The tech giant could find a massive cash reserve of funds to purchase new companies because of the corporate tax cut alongside a one-time allowance for organizations to repatriate without a heavy tax hit their cash stored in foreign parts of the world. Most of the US$252 bn cash reserve of Apple is in foreign jurisdiction, which the company had previously not been able to get back to the U.S. As noted by some renowned analysts, among Apple’s potential merger and acquisition targets could be Netflix.

Apple Needs Only a Third of Cash Sitting Overseas to Buy Netflix

Prior to the prediction of Apple’s acquisition of Netflix, the analysts had envisioned Disney acquiring TV and studio assets of Fox. Even before this forecast, a 20-30% chance had been allotted to an Apple-Disney association. Since years, Apple has been facing challenges to come up with a convincing movie or TV offering. Although iTunes has earned at large for the company, viewers have been found to progressively shift to Hulu, Amazon, Netflix, and other services to enjoy their favorite shows. However, the company has made its first move into content creation with its first scripted video series featuring Reese Witherspoon and Jennifer Aniston.

Apple has a 90% of its cash sitting overseas, which the company has historically skipped to repatriate to duck high taxation. However, with tax reform allowing the company to put the cash to use and a one-time tax repatriation of 10%, there would be a US$220 bn still left for buybacks and mergers and acquisitions.