CITI: There is a 40% chance Apple will acquire Netflix


Both analysts say there is a 40% chance of it happening as the new tax rules will see Apple bring back into the United States about $220 billion.

Citi reckons that Apple could repatriate about $220 billion in cash it has sitting around outside the 2018, and that the company would only need spend about a third of that cash to gobble up Netflix.

The note was written before Disney announced that it would acquire 20th Century Fox's studio and TV assets, giving a potential Apple-Disney deal a 20% to 30% chance.

Citi analysts say that there is a 40% likelihood of Apple acquiring Netflix.

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The research note sent out to investors looks at a bunch of potential purchases Apple could make with its massive cash pile, and Netflix is listed as the most likely. If a 30 percent premium is added, it could well be a purchase of almost $108 billion, much higher than the $3 billion Apple spent to purchase Beats Audio - its largest acquisition so far - in 2004. After taxes, Apple would bring roughly $220 billion, with that sum growing about $50 billion each year. While Apple has $252 billion hoarded away (90% of it held overseas), the Trump tax cut will allow the company to repatriate these holdings while taking a small tax hit. "This is a good problem to have", Business Insider quoted Suva and Merchant as saying.

It was reported past year that it planned to rent California's Culver Studios for the shooting of original TV shows and movies, as it has plans to invest up to $1 billion in TV and movie productions. As such, tax reform may allow Apple to put this cash to use.

Apple has recently dipped a toe into content creation: Jennifer Aniston and Reese Witherspoon will be in Apple's first scripted video series.

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.