Apple Might Use $250 Billion Repatriated Cash To Acquire Netflix
Recent reports have revealed that there is a high likelihood that tech giant Apple could purchase Netflix, along with other entertainment companies with their repatriated cash. The news comes after the Tax Cuts and Jobs Act of 2017 cut the repatriation rate to 15.5 percent.
"The firm has too much cash – nearly $250 billion – growing at $50 billion a year. This is a good problem to have," Citi analysts Jim Suva and Asiya Merchant told clients, as reported by 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 percent of its cash sitting overseas, a one-time 10 percent repatriation tax would give Apple $220 billion for M&A or buybacks."
Further reports reveal that Apple's $250 billion repatriated cash could be used to acquire Netflix at a 40 percent possibility, which is then followed by Disney in the list of likely acquisition candidates. The list also includes Tesla, Hulu, Activision, Electronic Arts, and Take-Two. Regardless of what the tech giant's decision might be, the impact on the shares and profit of Apple is predicted to be positive. Furthermore, given that the acquisition of Netflix will only cost them a third of the money, it seems to be the most likely candidate out of all the entertainment and developer companies.
Aside from the reasoning that was presented, Apple has also been notably making efforts to infiltrate the TV market and the acquisition of Netflix could almost certainly provide a generous solution to their problem. Apple has yet to respond for comment on the matter, but analysts contend that negotiations will begin soon. Regardless, more information on which company might be acquired by Apple is expected to be released in the coming months.
