Apple (NASDAQ:AAPL)
CEO Bob Iger allegedly explores the sale of Hulu and ESPN as part of a cost-cutting and strategic review of the company’s streaming and digital operations as The Walt Disney Co. celebrates its centennial. As a result, Apple stock surged in the market.
But could anything be more revolutionary than Apple (NASDAQ:AAPL) acquiring Disney (NYSE:DIS), one of just a few businesses with the financial wherewithal to purchase the renowned entertainment giant?
A merger of these titans would produce content, technology, and entertainment on an unprecedented scale. And Needham analyst Laura Martin says it makes a lot of sense on several levels.
Martin said in his assessment that a merger between Apple, with 1.25 billion “unique customers” utilizing its goods and services, and Disney, with 570 million people reached annually, would be “worth more combined than individually.”
Martin argued that the two companies are “complementary” since they have different skills that may be amplified by working together. With 1.25 billion “unique and rich consumers” and 2 billion iPhones and iPads in circulation, it’s clear that Apple uses this model to deliver content to its customers. What Disney excels at, according to Martin, is developing and distributing internationally recognized content franchises for digital screens “as well as in the physical world.”
Martin also said that a merger between Apple (AAPL) and Disney (DIS) would benefit both firms since they are “marketing juggernauts,” have devoted client bases, can demand high prices for their products, and are two of the largest and most well-known brands in the world.
With a market worth of $2.6T, Apple is in the same category as Microsoft, and no other company comes close. Disney is valued at over $178B now. Apple could easily spend more than $200B to put the Disney business under its jurisdiction, considering the premium included with any acquisition.
Nonetheless, Martin argued that the acquisition was worthwhile for Apple despite the high cost since it would strengthen Apple’s position in the content and technology markets.
“Defensively, content surpasses technology as a multi-decade moat,” Martin said, adding that combining Disney’s goods with those of Apple might increase Apple’s market value by as much as 25%.
When Apple releases its financial results for the second quarter of its fiscal year in April, investors will get the next update on its progress. Apple announced Wednesday that the annual Worldwide Developers Conference will begin on June 5 at the Apple Park site in San Francisco.
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