Apple’s cash conundrum: Is buying Disney the answer?

“When you’re an ordinary human, it’s smart to have some money to your name. But when you’re a public company, having a large cash balance starts to make investors impatient,” Emily Bary writes for Barron’s. “That’s the situation Apple finds itself in as it sits on more than $200 billion in cash. Some of the money is parked overseas, and while it’s currently costly to bring those funds back to the U.S., President Donald Trump could make that process cheaper.”

“So what should Apple do with all the cash?” Bary writes. “One analyst recently did a 20-page deep-dive into the merits of an Apple buying Disney. ‘While odds are low,’ RBC analyst Amit Daryanani says the deal has ‘greater than 0% probability’ and could benefit Apple in a number of ways.”

“He estimates that Apple would have about $200 billion in cash to use for a deal after ‘repatriating’ its overseas money back to the U.S. and using some of the funds for operational purposes,” Bary writes. “Daryanani predicts Apple could pay $157 a share for Disney, 40% higher than its current price of $104, using debt to fund part of the acquisition. All in, he sees a deal with a total value $257 billion.”

Read more in the full article here.

MacDailyNews Take: A long-shot, but if it happened, it’d be a massive, unprecedented move on Apple’s part.

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21 Comments

  1. Conceptually, this is not a bad idea. The synergies between the two companies are pretty obvious. I would keep the theme parks because of their close relationship with the entertainment division.

    Having said that, execution is key. Iger is signed through 2019 with no heir apparent. Any deal would have to guarantee Iger’s hand on the helm for many years beyond that because Cook would be in way over his head. No Iger? No deal.

    As a case study, makeup of the revised board of directors could be interesting.

    1. I think Tim would be better off running Disney a company that can coast and finding someone else to run Apple, someone who thinks outside what he learned at MBA school.

  2. As always, I worry that they are pulling too far away from technology. I fear that Tim Cook’s fascination with the entertainment industry is not based on attempting to provide people with better tech to consume entertainment, but with personal and cultural attraction to the world of Hollywood. He likes being invited to the right cocktail parties and seeing and being seen with celebrities. I believe this to be in no small part why he seeks to be one of the who’s who on the liberal left and social justice causes.

    His desire to be a part of that world leads to irrational acts like removing the stupid Flag of the Confederacy from products that Apple sells and replacing gun emojis and other such nonsense.

    Maybe he could just buy Pixar from Disney and regularly meet with Pixar creatives to give him hints about what they need from Pro level Macs.

  3. MDN: “long-shot, but if it happened, it’d be a massive, unprecedented move on Apple’s part.”

    Unprecedented, and stupid. If Apple were to spend $257 Billion to buy Disney, that’s a signal that they’ve run out of ideas and it’s time to get out. Apple would be wiser to invest more in, say, the automotive space (cf. Intel’s $15 Billion purchase of Mobileye), and in home automation (where they’re well behind Amazon). What about expanding the Services portfolio to deal with security – an enormous market.

    Buying Disney? That would be a Mickey Mouse move.

    Full disclosure: I hold Disney, but hold more Apple.

  4. “Apple has money they should buy things… preferably things I own.”

    Investors getting impatient? All they did was give Apple some money and most of them have made that back PLUS some. Do they think they are owed some of Apple’s vast fortune without doing anything material to earn it? Sounds like welfare to me.

    If they’re all that impatient, then they should sell all their shares. Since they’re not, then they’re not too darned impatient.

  5. That’s a head-scratcher. I don’t like the idea because I think that’s too much money to spend on one company. I could see Apple spending money on something like MasterCard as it would bolster ApplePay and the market cap of that company seems reasonable and affordable.

    I honestly don’t know anything about acquisitions or what it takes to control new companies. I think Disney is a good company but I’m not smart enough to understand how well it fits Apple. I don’t think anything could go wrong as long as Disney continues to produce hit movies and provide video content for Apple. I suppose the only thing I don’t really like is the high price for Disney.

  6. It would be a merger not a buyout. Then the arguments would be about whose names came first Disney Apple or Apple Disney. Maybe Dapple or Disapple. Applesney.

    1. When one company purchases all outstanding stock of another company using a “stock swap,” that’s generally considered a “merger.”

      When one company purchases all outstanding stock of another company using cash, that’s generally considered a buyout.

  7. What Apple needs to be doing is investing in future technology. Have you heard any lectures lately or in the past 10 years on advanced artificial intelligent, human augmentation, or the prospects of a more advanced human civilization by way of continued advancements in our technology? The future for Apple’s field isn’t predicted to be incremental and slow as their product launch cycle would have you believe, instead it is explosively exponential and radically evolutionary for humankind. Apple needs to be investing into THAT, NOT Disney. Please stop trying to confuse an already misdirected Apple into doing something that would surely see it make a 100% shift into the service and entertainment industry.

  8. … NO.

    Stick to your expertise Apple. Ignore the ignorami who think you’re supposed to spend all your money on something-or-other that is not within your expertise. I got to watch Eastman Kodak pull that dumbass move a number of times. Witness the results.

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