Apple’s purchase of Disney could become a deal of the century

Apple’s purchase of Disney could become a deal of the century

The presumable purchase could cost Apple unbelievable $ 200 billion. But if the deal does take place, it will completely reverse the future of Silicon Valley and Hollywood, according to analysts from Insider pro.

Is it really going to happen – considering that this would be a truly huge deal, potentially worth hundreds of billions of dollars? Researchers at RBC Capital Markets believe that the merger between the world’s most expensive high-tech company with almost a century-old media giant would cause a real storm in both the technology sector and the entertainment industry.

«The combined company will be huge, and its financial capabilities will allow to launch a revolution in services, as well as in the production of devices and content. If something is capable of frightening both Silicon Valley and Hollywood, then this is exactly such an association», — they notice in a note to investors. But where did these rumors come from, and how likely is such a deal?

► Apple’s accounts hold hundreds of billions of dollars

Theoretically, Apple has the money needed to buy Disney. The company’s foreign accounts hold about $ 230 billion. They are waiting for the return to the country, but currently such an operation is fraught with huge losses due to taxes, so the corporation is waiting.

The company’s CEO Tim Cook said he “optimistically” looks at the prospects of tax reform, which will allow to avoid huge losses when repatriating capital in the US.

► Disney will cost a fortune

Well, Apple does have a lot of money, but still Disney is a very expensive company with a market capitalization of $ 237 billion. Moreover, RBC analysts believe that if the deal takes place Apple will have to pay 40% extra to the current value of the shares. If the Company however succeeds in repatriating $ 200 billion after the taxes are paid, then this amount still won’t be enough, and it will have to borrow. So far, Apple’s most expensive purchase cost it two times less – when the tech giant bought music company Beats for 2.2 billion dollars.

Overall, it will not be that easy, but many people still consider this possibility. According to analysts, investors “often ask” if Apple is going to buy Disney. But why is any of it is needed? Why should Apple try to buy Disney?

There are several possible reasons for this:

To reduce the dependence of business on iPhone sales. Now they account for over 60% of the entire income. This is a phenomenally successful product, but in the end Apple is very dependent on the market situation.

To encourage the development of services. While the smartphones market growth is slowing, Apple is trying to cultivate other areas, and numerous services (including Apple Music) are of huge importance to the company. Disney with its enormous library of content and its media channels by subscription would be a great help.

To compete with Netflix and Amazon on their own field. By combining technology expertise with the content library and experience in its production, the company could become a significant player in the video streaming market.

And finally, these two companies have something in common. Steve Jobs, the late leader of Apple, was at the same time the largest shareholder in Pixar animation studio, which is now part of Disney.

The RBC writes: “None of the players separately did enter this market, perhaps because of high competition. At the same time, the combined company would have a ready-made video distribution tool (via devices sold by Apple and the iTunes store), along with the immense library of ready-made content and the facilities for making movies and TV shows. »

Furthermore, experts note that in the event of a merger, companies will receive a number of unique opportunities and will be able to solve even those tasks that were previously beyond their strength.

And, finally, the major argument of RBC analysts in favor of the deal:

«It is important that Apple and Disney are not just the leading companies in their industries. Each of them is a world-class business conglomerate with its unique products and services, familiar to almost the entire planet’s population. At the same time, these two companies almost never compete with each other. So if you ask what exactly could they do together, then, given the scale of their financial and technical capabilities, the answer will be – whatever they want».

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