The end of 2017 saw Disney attempt to take on industry behemoth Netflix with a proposed $52 billion takeover of 21st Century Fox. But a pair of analysts from financial giant Citi think there’s a good chance Netflix itself may soon become part of an acquisition that eclipses the Disney/Fox deal: they believe there’s a 40 percent likelihood that Apple will acquire the streaming service.
Jim Suva and Asiya Merchant say the potential takeover is a result of President Trump’s corporate tax cut, which allows companies a one-time allowance to repatriate money from overseas without being hit by a massive tax bill.
Apple famously has 90 percent of its cash, or around $252.3 billion, held outside of the US. Instead of the previous 35 percent it would have had to pay to bring it back to the US, Apple would now pay less than half that amount, leaving it with an estimated $39 billion tax bill. Considering it already has $36.3 billion set aside for such an eventuality, the move seems likely.
In a December note sent to clients, Suva and Merchant marked Netflix as the company Apple was most likely to buy. The analysts said there is a 20 – 30 percent chance of an even bigger deal between Disney and Apple, but the report was written before the Disney/Fox acquisition. Other less likely targets include Activision, Electronic Arts, and Take-Two.
Disney is set to launch its own streaming service in 2019 and has confirmed it will eventually pull its Star Wars and Marvel movies from Netflix. While Apple has been creating some original shows and has reportedly set aside $1 billion for acquiring video content, this pales in comparison to what Netflix spends on its originals.
If an Apple takeover deal really does happen, it’s thought that acquiring Netflix will cost it around $85 billion to $105 billion.