With more than $250 billion in cash, Wall Street has been speculating what Apple will do with its war chest, with Citigroup the latest to weigh in last week with potential takeover targets for the electronics and entertainment company.
According to a report in Reuters, citing a research note issued by Citigroup analyst Jim Suva, potential takeover targets for Apple include Netflix, Walt Disney and Tesla. The way Suva sees it, with 90 percent of Apple’s cash overseas, a one-time 10 percent repatriation tax would give Apple $220 billion in cash, which it could use to make buys or buy back shares.
In President Donald Trump’s tax plan, which he rolled out in April, companies with cash and profits overseas will be able to bring them back into the U.S. at a tax rate of 10 percent, which is much lower than the 35 percent tax rate currently on the books.
“Since one of the new administration’s top priorities is to allow U.S. companies to repatriate overseas cash at a lower tax rate, Apple may have a more acute need to put this cash to use,” Suva wrote, according to Reuters.
The analyst said there are other targets Apple may go after: Activision Blizzard, Electronic Arts, Take Two Interactive and Hulu. In coming up with the potential targets, Suva said they were screened for strategic fit, global scale, transaction size, few non-strategic assets and the potential impact on the share price of Apple.
Reuters noted Apple is under pressure from investors to use its cash hoard, which Apple did recently by increasing its capital return program by $50 billion. It also increased its share buyback by $35 billion and hiked its quarterly dividend by 10.5 percent.
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