Why Apple should buy Disney

“Recently Margate Capital, a hedge fund run by former Tiger Cub, Samantha Greenberg and John Malone, floated the idea that Apple should acquire Disney,” Open Square Capital writes for Seeking Alpha. “We examined the idea to see if it made sense, and have come away believing that the synergies of a combined company would be transformative for Apple. Using some conservative assumptions, post-acquisition, Apple’s stock should increase from $120/share today to $200/share by end-of 2018.”

“From an investor standpoint, one of the main reasons for why Apple’s stock price trades at a discount to the market is that there’s uncertainty as to whether Apple’s iPhone can sustain its sales and margins going forward,” Open Square Capital writes. “We’ve disagreed with this bear thesis as we think the ecosystem (i.e., software and services) and the hardware sales (i.e., Mac, iPhone, iPads, etc.) are mutually reinforcing and collectively strengthens customer captivity and brand loyalty.”

“Yet, the stock trades at a 13.4x multiple to this year’s estimate and a 14.4x multiple to trailing twelve month earnings (TTM). Compared to the broader market average of 25x, this multiple presumes a stagnant company and undervalues the quality of Apple’s existing business,” Open Square Capital writes. “Thus, we believe a Disney acquisition could be transformative for Apple as it would accomplish three goals: 1. Insure Apple’s cultural impact and brand relevance for the foreseeable future; 2. Increase the breadth and depth of Apple’s business lines; and 3. Increase the value of Apple shares.”

Tons more in the full article – recommendedhere.

MacDailyNews Take: Well, even Eddy would be able to get some ink out of that deal. Can’t sign ’em, buy ’em. At the very least, such a move would instantly make Apple TV and Apple’s “TV” app infinitely more interesting. It’d also be a nice completion of the circle: Disney buys Steve Jobs’ Pixar, then Steve Jobs’ Apple buys Disney (and Pixar).

SEE ALSO:
Laurene Powell Jobs’ fortune jumps a cool $1 billion in a day as Disney soars – February 6, 2015
Disney completes Pixar acquisition; Steve Jobs now Disney’s single largest shareholder – May 5, 2006

44 Comments

    1. Not sure about the viability related to the numbers, but the Disney branding would have a broader cultural touch than the shallow hipster branding likely to result from Dr. Dre/Iovine’s production pursuit.

          1. Diversification is not a growth plan, it is a risk mitigation plan. You get slower but more predictable growth.

            That is the antithesis of everything Apple has ever been.

            Distraction galore. How is Apple supposed to stay focused on devices in some year in which Star Wars movies are flopping and killing their quarterly projections? Terrible idea.

            1. Growth and diversification are not mutually exclusive… you even mentioned that in your 1st line.

              But never the less would like to know what path to growth and diverdification would u offer?
              They are both needed for a better PE on the stock.

      1. Tim Cook can’t handle any more responsibility, he’s having difficulty managing what he already has on his plate. The end result would be less focus and more mediocrity all around. Apple has suffered enough, no need to expand the misery and disappointment.

          1. Agree. Separate companies would work better. Tim can’t handle Apple now, so a merger with Disney would be a disaster.

            Tim needs to be replaced — pronto!

            Apologists can say anything they want in defense of Clueless Cook. But those of us with functioning brain waves know he is over his fashion activist head, sorry.

      1. Star Wars is on the hot path with four or five $500 million movies on the horizon.

        Disney is certainly a good buy for Apple as much as Lucas Films was a good buy for Disney. These are all California firms or once were.

        For a new hope. And ’77 Star Wars on BluRay.

          1. I understand what you are saying. With the past release schedule, SW is on a new run, and what’s come out has been very profitable, only two films. So at this point just follow the money. If you new stories, honestly there are only 10 major plots, go watch Selma or other breakout film. 2017 is going to be a good year for the film industry and it’s been getting better.

      2. True, it may be a strategy to break into the major networks to force a deal for Apple TV, etc…

        …but Disney’s been having some troubles with marketshare declines – – my hope is that this rumor firms up well enough to get our Disney stock up several points so that we can get rid of DIS in our Portfolio.

    1. I think it more about film & TV library media acquisition for Apple TV. Unfortunately you can’t just buy up every studio. Entertainment fragmentation is a nightmare to navigate.

  1. Lord no. Disney wouldnt be what it is. They’d probably turn Disney world into some hipster hang out lol.
    I just can’t see what Apple can do for Disney?
    What would Disney want with a computer company? Maybe apple could buy and then all the computers at WDW could be Apple lol.

  2. I was thinking about this. But they should have did this when Steve Jobs was the Disneys single biggest shareholder.

    But at this point, it’s doesn’t just not
    make sense , but they couldn’t afford it.

    1. They can absolutely afford it, Disney is much smaller than apple by market cap, they could pusrhcase it in cash. And Laurene Powell Jobs is the single largest Disney share holder after inheriting Steve’s shares.

      1. Disney is worth 171.15 billion

        Apple has ~266 billion in cash and can borrow virtually unlimited money. They could put 33% in cash and roll the rest into a bond issue simultaneously boosting apple’s share price and revenue while paying down the bond debt with the growth from the purchase. This makes entirely too much sense, they might have to do it.

  3. One of my reservations about this thing is the value placed on legacy content is too expensive. We are on the verge of a major paradigm shit in consuming content. These VR or AR glasses are going to allow us to have almost holodeck experiences. The content and action will be all around us. AI will also allow us to interact and have unique experiences with the content.

    This new format will take a few years to be ubiquitous, but once it does, consuming 2-D content on physical screens is going to be like traveling to a movie theater to watch the news.

    1. I wouldn’t discount the VR experience of going to watch a 2D movie theatre complete with virtual people getting up during the showing to obscure part of the view. 😀

  4. Might not be as, well, unApple, as it first sounds.

    Still, the entire Apple current ecosystem would not get the focus and attention it needs and deserves if it’s just an division of a diversified entity embracing many at best loosely related activities, skills, etc.

    OTOH, there are some here feeling that’s already happening, or rather not happening…..

    Hmmmmm.

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