In the wake of the Walt Disney Company announcing the purchase of 21st Century Fox's entertainment assets, it seems like any merger or acquisition is possible in the conglomerate world.
As reported by Business Insider, Jim Suva and Asiya Merchant posit that Apple has a 40% likelihood of purchasing Netflix since US President Donald Trump has passed a corporate tax cut.
The analysts point out the tax cut as well as the one-time allowance for companies to bring cash stored in foreign markets, repatriating the money without a huge tax hit. Apple is reported to have over $250 billion in cash though a lot of it overseas. This would allow them a greater opportunity to make such a purchase without taking a hit from the federal government.
Apple has recently begun to make an effort in bringing original entertainment content to its users, including a new series featuring Reese Witherspoon and Jennifer Aniston. However, they have struggled in this area.
Netflix would certainly add a huge boost to Apple's repertoire and give them a huge footing in an area where they're inexperienced.
The report was done before the process of Disney's acquisition of Fox assets was announced, so it remains to be seen how it will be affected. Before the deal, the analysts put a Disney/Netflix deal at a 20%-30% chance.
"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 said to Citi clients. "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 [merger and acquisition] or buybacks."
Of course, this is all up in the air until the ink on the contracts dries up.