Disney's Stock Market Plunge May Open The Door For Apple To Attempt An Acquisition

Disney's Stock Market Plunge May Open The Door For Apple To Attempt An Acquisition

While this is probably unlikely to happen, Rosenblatt Securities analyst Bernie McTernan is claiming that with the current state of the stock market, Apple may soon look into acquiring Disney.

As the stock market continues to plummet, with shares in entertainment companies being hit especially hard, due to the ongoing coronavirus pandemic, some Wall Street experts have begun to speculate on whether one of the biggest tech conglomerates in the world could look to acquire one of the most storied Hollywood studios. 

With The Walt Disney Company's stock having dipped below $100 last week ($93.53 at the end of business today), Rosenblatt Securities analyst Bernie McTernan suggested, in his Friday research report, that Apple could actually look into acquiring the House of Mouse at its current price. 

He writes, "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."

Disney's main appeal to Apple, outside of their vast library of content, is, of course, their Disney+ streaming service, which, unlike Apple TV+, was a runaway success at launch. Despite being released first, Apple TV+ has unsurprisingly struggled and McTernan theorizes that acquiring Disney could solve all of their problems on Day 1. 

Disney currently holds a market cap of approximately $168.5 billion while Apple is currently holding about $107.1 billion in cash, cash equivalents and marketable securities. To make any potential deal work, Apple would need to use a combination of cash and stock, take on some additional debt, and may ultimately need to spend upwards of $400 billion to actually close. 

While the move would be worth it for Apple, possibly boosting their annual revenue by about 30%, a deal actually coming to fruition remains unlikely, at best, since Disney stockholders won't be so keen on approving a buyout at its current value. Disney is also still in the midst of integrating all 20th Century Fox media assets into their company, so the timing of another buyout is certainly not ideal.

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