Once again, the rumors have started that Apple may buy Disney. However, the Sellers Research Group (that’s me) says (again) that it’s not going to happen.
According to Newsweek, Apple and Disney “could be merging into one gargantuan company, which experts believe will benefit both companies.” Talks of a team-up were sparked again recently when Needham analyst Laura Martin told her clients that an acquisition would make Apple worth 15-25% more valuable.
It’s not that Apple can’t afford to buy Disney. Currently, theWalt Disney Co’s market capitalization is $175.4 billion. Apple has cash reserves of around $200 billion.
While both companies are massively successful, a merger would see profits soar, according to business expert and consultant Christina Curtis. As a result of her prognosis, both companies’ stock prices increased by about 1% each.
Given their complimentary customer footprint, merging these two powerhouse businesses would likely drive substantial growth,” the founder of Curtis Leadership Consulting told Newsweek. “Based on the slight bump in stock price increase for both companies, it appears investors would agree. It’s easy to imagine how they could seamlessly weave their technology and services together, capturing more mindshare from consumers who are eager to be a part of the entertainment value both Apple and Disney bring.”
What’s more, “the thing that drives [mergers and acquisitions] is that it’s easier to buy something than build it. Disney is a major property owner, but its content will be driving this merger. Apple has the platform and the distribution, while Disney would be providing the content,” Manderson, a partner at Ervin Cohen & Jessup LLP told Newsweek.
There’s been speculation over the years that either Disney or Apple would be interested in such a deal. Previously, Iger noted that Steve Jobs was a close friend. A Disney-Apple merger might have been on the table if it weren’t for Jobs’s untimely death in 2011.
“He’s going to sell the company,” one Disney insider who has worked for Iger told The Wrap. “This is the pinnacle deal for the ultimate dealmaker.”
Landing a deal with Apple (or some other megabuyer) would also cement Iger’s legacy. “I think he’d welcome it — he’d be the last CEO of Disney,” a former top Disney executive told TheWrap, noting that the two companies have “similar brand identities” and could benefit from a merger.
There are benefits, of course, but such a massive purchase goes against Apple’s pattern of acquiring companies. Apple generally acquires smaller companies and rarely purchases big ones. And buying Disney would be really expensive.
Plus, with Apple purportedly working on an Apple Car — a massive undertaking in itself — would the company want to enter another major business venture? An Apple Car and integrating with Disney would spread the companies resources — as massive as they are — waaaay too thin. If Apple is really interested in buying Disney, it should ditch the Apple Car project.
Finally, as Manderson told Newsweek, any attempt to combine with Apple would be met with legal opposition.
“Assuming Disney is the target, what happens every time there’s a public company acquisition is the sellers’ Board of Directors gets sued for breach of fiduciary duty. There will always be allegations that they didn’t run a proper sale process, that they’re selling the company too cheap and screwing the shareholders,” he said. “There will almost certainly be shareholder litigation, but it’s unlikely it would put a stop to a potential acquisition. They may sue for an injunction to stop the acquisition, but in reality, it will be a shakedown to extract money from the board in legal fees. These lawsuits almost always settle, typically with some minor adjustment in the purchase price and some additional SEC filings.”
