UBS Pours Cold Water On Apple Mega Buy

Wall Street analysts Steven Milunovich and Benjamin Wilson are pouring cold water on speculation that Apple could use its cash hoard to acquire Netflix, Disney or Tesla, arguing in a research report that Apple won’t buy a company that doesn’t bring something unique to it.

According to a report in Business Insider, the analysts said in a research report to clients that while Apple’s Chief Executive Tim Cook has said he isn’t against a big deal, it would have to put Apple in an area it doesn’t play in, such as transportation, health, home automation or content.

“While we agree with the conclusion, it could be suggested that either Netflix or Disney would greatly accelerate Apple’s content acquisition, while Tesla is the undisputed leader in autonomous vehicle tech, so it’s not a particularly powerful dismissal,” wrote the analysts, noting that if Apple ever goes after a huge merger, it will be something that is unexpected and catches everyone off guard.

“Our view is that the probability of mega-mergers is low as it should be,” they added.

Last week speculation was swirling that Apple could use repatriated cash to make a mega buy with Citigroup floating Disney, Netflix, Tesla, Hulu, Activision, Electronic Arts and Take-Two Interactive as potential targets. Citigroup gave Netflix the greatest chance of being a target for Apple with Disney and Tesla garnering lower odds. With President Trump’s tax plan enabling companies to bring back cash into the country at a 10 percent tax rate rather than the current 35 percent tax rate, Citigroup said Apple could have more than $200 billion to use for buys and other shareholder positive actions. Citigroup isn’t the only analyst to speculate about a deal between Apple and Disney with RBC floating the idea recently.


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