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Apple Likely To Acquire Netflix: Things Need To Know

Financial analysts state that there is a 40 per cent chance that this merger will take place

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The Trump administration has provided multinational corporates with an opportunity to invest their foreign capital back in the US without bearing the brunt colossal tax cuts. As a result, Apple has an unprecedented opportunity to cut a wide swath in the online streaming and television industry by acquiring Netflix and therefore competing with Amazon Prime & Fire Stick and Google-owned Chromecast & YouTube.

Earlier in 2017, there were reports stating that online streaming giant Netflix was in a midst of a financial quagmire. The LA Times reported that Netflix had almost doubled its spending in 2017 as compared to last year in a bid to produce more content. Financial analysts also expressed concern that the firm's growth could soon hit a stagnation point. Keeping in mind the aforementioned, one would perhaps see the Apple merger/takeover as a rather fruitful one for both parties involved.

The merger would serve a threefold purpose: facilitate Apple's endeavor to make an impact in the film and television streaming industry (given that Apple TV losing its demand in the market owing to Google Chromecast and Amazon Fire Stick), provide Netflix with the capital to continue to produce compelling original content and escape their financial quagmire, and finally, as with all horizontal mergers, provide the everyday user with a broader array of choices and perhaps more reasonable pricing.

However, at $100 billion, Netflix would be Apple's largest acquisition and certainly an expensive one! According to Citi analysts Jim Suva and Asiya Merchant, Apple has over 90 per cent of its cash sitting overseas and a one-time 10 per cent repatriation tax would give Apple $220 billion for mergers and acquisitions. The analysts also state that here is a 40 per cent chance that Apple will acquire the streaming juggernaut. The world awaits the final outcome of this highly intriguing potential merger.

From the merger, Apple could take benefit of the corporate tax reform bill to gain access to the hitherto inaccessible foreign capital in order to acquire Netflix.  

Netflix merger pivotal to keep alive Apple's endeavour to make an impact in the online film and television streaming industry. Also, Netflix battling their financial quagmire to stay competitive with other online streaming competitors such as Fire TV Stick and Chromecast.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Tags assigned to this article:
apple netflix mergers and acquisitions

Ashwin Malik

The author is intern with BW Businessworld

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