Citigroup listed seven companies as potential takeover targets for Apple Inc, including Netflix, Walt Disney and Tesla Inc, as a way to put its cash hoard of more than US$250 billion to work.
With over 90 per cent of its cash sitting overseas, a one-time 10 per cent repatriation tax would give Apple US$220 billion for acquisitions or buybacks, Citigroup analyst Jim Suva said in a note to clients.
U.S. President Donald Trump’s tax blueprint, which was unveiled last month, proposes allowing multinationals to bring in overseas profits at a tax rate of 10 per cent versus 35 per cent now.
“Since one of the new administration’s top priorities is to allow US companies to repatriate overseas cash at a lower tax rate, Apple may have a more acute need to put this cash to use,” Suva said.
The analyst is rated three out of five stars for his recommendations on Apple, according to Thomson Reuters StarMine.
The other potential acquisition targets include video game developers Activision Blizzard, Electronic Arts and Take Two Interactive Software as well as video streaming service Hulu.
The analyst said the targets were screened considering five criteria – strategic fit, global scale, transaction size, few non-strategic assets and likely impact on Apple’s share price.
Under pressure from shareholders to hand over more of its cash hoard, Apple recently boosted its capital return program by US$50 billion, increased its share buyback program by US$35 billion and raised its quarterly dividend by 10.5 per cent.
© Thomson Reuters 2017