An analyst report suggests that tech giant Apple could be preparing a bid for SVoD giant Netflix.
Analysts at Citi claim that there is a “40 per cent chance” that Apple could buy Netflix as a consequence of increased cash reserves following President Donald Trump’s corporate tax cuts. Apple would also get a huge cash boost due to a one-time allowance that enables companies to repatriate cash stored overseas without major tax implications.
In these circumstances, Citi analysts Jim Suva and Asiya Merchant suggest that Netflix is the company Apple is most likely to acquire.
The analysts told Business Insider: “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. “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 per cent of its cash sitting overseas, a one-time 10 per cent repatriation tax would give Apple $220 billion for M&A or buybacks.”
Apple would only need around a third of that cash to buy Netflix, they said.