With Netflix currently enjoying its comfortable status as the undisputed king of over-the-top streaming services, it might come as a surprise to hear many stock market and media industry analysts predicting that the company might soon be purchased by one of the biggest names in tech. However, according to a recent analysis by Citigroup, there is indeed a 40% chance that Apple might be buying Netflix.
Apple currently has a vast amount of cash sitting in overseas markets. With so much talk of corporate tax reform in the U.S., many insiders are speculating that Apple might be looking to bring some of that cash back by means of a merger and acquisition with a domestic company like Netflix or even electric automaker Tesla.
According to CNBC, Citigroup analysts predict that Netflix could be Apple’s most logical acquisition based on the two company’s global reach, strategic fit, transaction size, each company’s low amount of non-strategic assets, and, most importantly, the likely impact the merger could have on Apple’s share price. In a statement to CNBC, Citigroup analyst Jim Suva believes that the merger and acquisition could likely benefit both parties since Apple already has one of the widest market reaches in the world:
Like Apple, Netflix is global, has no non-core assets (like Disney) and is disrupting the global video ecosystem. Apple could help accelerate this disruption.
Hulu and Disney have also been suggested as potential Apple acquisitions, although most analysts seem to believe that Netflix makes the most sense for Apple. While Netflix currently spends nearly as much as it brings in, many investors believe that the streaming service’s long-term strategy of growth and investment will soon start to pay off with big returns. Given that Netflix is currently growing much faster than any other streaming service or cable network, why wouldn’t Apple want a piece of that action?