Should Apple Buy Disney?
After the recent market downturn, Disney has lost nearly 40% of its market value. With a total market capitalization of $171 billion, it would be a financially doable acquisition for Apple. A merger of two of America's and the world's most beloved brands.
Apple is sitting on $107 billion of cash and liquid securities, another $100 billion of other current assets and has nearly $80 billion of annual cash flow.
And with most of Apple's cash flow generated from online sales and services, the recent retail store closures for Coronavirus should not have a huge affect on Apple's financial health. One Wall Street analyst pegged the revenue loss at just 1.5% for the quarter.
Apple's biggest concerns for its business model include content for streaming.
Disney's vast catalogue would be ideal for Apple. AppleTV has not performed as well as forecast and Disney+'s 26 million subscribers would instantly make Apple into one of the largest streaming services and formidable competitor to the dominant Netflix, another potential Apple target according to some.
Fortune Magazine ranked Apple as the most respected global brand and Disney as the 4th, with such a high amount of global esteem for both brands, neither would lower the other's standing in the eye of the consumer. Often one company will shy away from acquiring another's assets because they may feel the target's brand doesn't measure up to their own. But Apple and Disney are both beloved by millions of consumers and each possess a cult following of their work.
As phones become more and more of an extension of people and an item they can't live without, Apple stores and help centers would seem ideal to pop up all over Disney.
In longtime Disney CEO Bob Iger's book last year; The Ride of a Lifetime, he mentions that Apple and Disney might have merged if Steve Jobs were still alive today. The idea being that Jobs was a big fan of Disney and was at one time their largest shareholder, owning a 7.7% stake. Jobs received this stake as payment from Disney for selling his animated studio Pixar.
Of course who knows if the Disney shareholders would approve a sale during the Coronavirus scare? There might be shareholder rebellion against the idea of selling out when times are bad, vs a perceived higher price when the world has gotten back to normal.
A sketch of the potential deal was done by the bank RBC back in 2017 and the takeover idea has been thrown around on Wall Street for years.
When asked a few years back about the potential merger, Eddy Cue, senior vice president of software and services at Apple said, "Both Netflix and Disney are great partners of ours. Generally in the history of Apple — we have not made huge acquisitions. The reason why ... it's the old Gretzky quote: "Skate to where the puck is going, not where it is."