Citi analysts say that there's a 4-in-10 chance that Apple buys Netflix

Apple is sitting with a vault so full of money that even Scrooge McDuck is jealous. Every now and then, Apple uses some of this money to make a small acquisition. For example, the company recently took $400 million out of petty cash to buy music discovery app Shazam. The largest acquisition that Apple has made by itself is the $3 billion it spent to purchase Beats Audio. But if a pair of Citi analysts are correct, there is a chance that Apple will top that record by a factor of approximately 34.

According to Citi analysts Jim Suva and Asiya Merchant, there is a 40% possibility that Apple will buy streaming video content provider Netflix. The latter currently has a market capitalization in excess of $80 billion. Add on a 30% premium and you're talking about a $104 billion purchase. Before Disney's bid for Fox, the two analysts gave an Apple-Disney combination a 20% to 30% chance of happening. The analysts say that a Disney deal would have a larger impact on Apple's stock price (20%) than a Netflix acquisition would have (6%).
The duo also say that there is only a slim 10% chance that Apple will go after game producers Electronic Arts, Take-Two and Activision.

While Apple has $252 billion hoarded away (90% of it held overseas), the Trump tax cut will allow the company to repatriate these holdings while taking a small tax hit. This will allow Apple to make a large purchase for a company like Netflix.

Now that we know that such a deal can happen, the question is, will it? Apple has started creating original content for Apple TV, partnering with Jennifer Aniston and Reese Witherspoon on a new show. And Netflix has found that it can get subscribers to pay it for original shows. So perhaps there is something to an Apple acquisition of Netflix. The major downside for Apple stockholders is that depending on how such a deal is structured, it would most likely lead to a decline in Apple's high-flying stock in the short term. That would interrupt Apple's opportunity to be the first company with a one trillion dollar valuation.

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