Peel. Apple. Get it? Oh, how we make ourselves laugh. Hopefully, you as well. In recent days, an old question has been raised within the financial community, could Apple buy Disney? The long-running rumor has resurfaced and it got us thinking. Could this really happen? Well, there is no better time than the present to bite into this ripe rumor. Grab your peeler and less get to the core of the big question, could Apple buy Disney?
Oh, the layers to peel to back on this. To buy any company, let alone a company the size and magnitude of the Walt Disney Company, a business would need to raise a large amount of capital (cash and assets). Unless you’re Apple. It’s well known that the technology giant is one of the company’s with the most available cash with estimates around $100 billion. It’s known the company is looking for ways to bring the cash into the US by paying the least amount of tax. An acquisition would be one way.
Ok, they have the cash, but why would Apple buy Disney? Beyond the desire to bring the cash stateside, Apple is amidst building its own streaming service. Apple TV+ launched on November 1, 2019. The majority of the subscriptions on the platform are currently “free” subscriptions, as Apple gave anyone spending $50 or more a month on an Apple service TV+ at no cost. The platform is still building out its shows, movies, etc. It’s a service that’s craving content. What does Disney have a lot of? Content. Everywhere you turn at Disney you see loads of content. This is even before they acquired Fox.
Why Has The Rumor Return?
We’re living in a very unique time in our world’s history. It’s the pink elephant in the room known as the coronavirus. With the world focused on the health and safety of everyone, as it should be, Wall Street is circling. They’re circling around the Disney stock and its large drop over the past few weeks. The stock is dropping for multiple reasons, with the main two being the closure of the parks/cruise line and the impact on the global box-office. According to Bernie McTernan, Securities Director at Rosenblatt, the company is under scrutiny from investors and under pressure to turn things around. He continues on to say the stock price is ripe for a purchase from a company like Apple.
Why It Won’t Happen
Assuming the Federal Trade Commission and Disney investors would approve a deal in the first place, which they more than likely it would not, there are many reasons why this would not happen. When someone says could Apple buy Disney, they are usually only looking on the surface. Peeling back the layers, for Apple to buy Disney it would take upwards of $400 billion to do so. Do you know how many Mickey bars you could buy with that much money? Us either, we don’t have that many toes, lets just a lot.
How do we get to that evaluation? Even at the current stock price, it’s projected that Disney stock would get a 50% premium on top of the current price. With the premium, the stock price would equal ~$140 per share. This would make a buyout equal to ~$400 billion. Even Apple doesn’t have this amount of cash on hand to make a purchase. They could raise capital to do so. Once again this assumes both the Disney investors, as well as the Federal Trade Commission, would approve it.
Rumors and people asking the question, could Apple buy Disney, are sure to continue for years to come. Ultimately, you never know what could happen, no one saw Disney buying Fox, but odds are very low of this ever occurring. In the DVC Duo house what we would like to see is a partnership between the companies. Just imagine the type of experiences they would create combining the Apple technology with Walt Disney Imagineering. Now that would be Imagination Pavilion we would like to see! For now, the idea Apple could buy Disney will remain a fun lounge discussion. Shall we meet at Abracadabar and see if we can make this rumor disappear?