Apple should seize on the current market volatility to buy the Walt Disney Company, Rosenblatt Securities analyst Bernie McTernan wrote in a recent note to clients.
The note, published Friday, suggests that Apple should seize on the opportunity of Disney’s recent stock price decline to acquire the Hollywood entertainment powerhouse. Disney closed Monday at $95.01, giving the company a market cap of $171.53 billion. It’s been trading below $100 since last week, following the temporary close of its theme parks, former CEO Bob Iger stepping, and ongoing issues related to coronavirus.
Apple, by comparison, closed at $242.21 on Monday, giving it a market cap of $1.06 trillion. As McTernan points out, Apple currently has around $107 billion in cash and securities on hand. That means that it could stump up a sizable portion of Disney’s valuation from its Scrooge McDuck-style cash pile alone.
Rosenblatt Securities’ research note opines that:
“We believe those with long-time horizons, like mega-cap companies with large cash balances and whose equity outperformed Disney over the last three weeks, like Apple, could take advantage of the volatility. The upside from acquiring Disney would be securing their content/streaming strategy and potential synergies from adding the emerging Disney ecosystem to the iOS platform.”
McTernan believes that, “Disney+ could solve Apple’s content problem as we believe AppleTV+ is off to a relatively slow start.”
Apple and Disney are both hurting (well, comparatively) right now. Disney has lost roughly one third of its market cap, while Apple has had some $300 billion wiped off its valuation. The entire stock market is taking a major hit right now as a result of the spread of the COVID-19 coronavirus.
Should Apple acquire Disney?
Bernie McTernan isn’t the first person to suggest that Apple could benefit from buying Disney. Over the years, discussion of a possible acquisition has been a fairly regular occurrence.
This dates back to the 1990s when Steve Jobs and former Disney CEO Bob Iger became friends. When Jobs sold Pixar to Disney, the deal made Jobs Disney’s single largest shareholder. (His family have since downgraded their share in Disney.) For a long time, Iger was on Apple’s board of directors. In his recent memoir, he also opined that Apple and Disney could have been combined into one company (or, at least, this option seriously discussed) had Jobs still been alive.
For the most part, Tim Cook has avoided making big acquisitions during his time as Apple CEO. Apple buys many smaller companies, but it rarely buys large ones. The biggest purchase was Apple’s $3 billion acquisition of Beats in 2014. Even at its reduced price, Disney would be more than 57x more expensive.
Via: Hollywood Reporter