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It’s Friday so let’s all engage in some low-stakes speculation. Would/should/could Apple buy Disney?
Wall Street thinks so. Amit Daryanani and other speculative analysts at RBC Capital Markets distributed a 27-page memo this week to clients indicating that investors “have increased their expectations that Apple could seriously consider acquiring Disney.”
The thing is, by “increased their expectations,” the firm means that the expectation is no longer literally zero.
“We currently place a ‘greater than 0%’ probability on the notion that (Apple) is seriously considering (Disney) as an acquisition target. More important is whether or not the market is giving it a serious consideration, and our conversations suggest that investors are giving such a transaction far more consideration than they were three or six months ago.”
So, why, then, is the market giving it serious consideration? Because it makes a lot of sense.
Apple has long wanted to increase their content services and have struggled with converting their music success to video on their own. According to Daryanani, the merger would allow Apple to “leapfrog Netflix, Amazon, and YouTube in content.” Together, the new company would be valued at $1 trillion on account of “almost limitless opportunities in content and technology.” The potential even extends to consumer tech integration at Disney’s theme parks and global streaming rights for ESPN.
Moreover, Daryanani thinks that, given their respective positions as icons in industry, Disney would strengthen and not dilute Apple’s brand value. And while the takeover is estimated at $200 billion plus, Apple CEO Time Cook is on the record saying that “deal size isn’t a negating factor.”
Plus, if certain Republican tax reforms (“tax repatriation holiday proposals”) become law, Apple can bring home more than $200 billion held abroad at a lower tax rate. This, however, is a pretty big if.
The interest is there, the potential is there, the money is there.
But again: We’re talking about “greater than zero” odds and, well, an industry whose job it is drum up interest in these sorts of things.
