Netflix has been on a meteoric rise over the last year. The popularity and success of its original content have pushed the company’s customer base to over 100 million subscribers, outpacing its closest competitors by far. Netflix is investing vast amounts of that newfound capital into new projects, from theatrical-release original films to a rumored Hollywood studio complex. With so much going for it, it might be a surprise to hear that Netflix might be the target of a new merger and acquisition deal, but that’s exactly what many big-name market analysts are predicting.
According to a report put out by financial analysts with Citigroup, tech giant Apple has a high probability of making a move to buy Netflix. That analysis was based on a comparison of each firm’s global market reach, overall strategy, average transaction size, the low amount of each firm’s non-strategic assets, and the massive stock boost such a merger and acquisition could provide Apple. Apple currently boasts an impressive amount of overseas capital and rumors are that the California-based company wants to bring some of that back in the form of a new strategic investment.
Another report issued by Credit Suisse claims that the best way to boost Apple’s stock is to invest in the services market; the best way to do so, according to their analysis, would be to acquire a service market leader like Netflix, stock symbol NFLX:
A NFLX deal may make sense but a potential ~$60bn deal for NFLX would be ambitious. However, given the desirability of providing video streaming content to Apple users and devices, it is a possibility with improved terms with content owners and potentially bundling with other Apple services.
Any future deal between Apple and Netflix is pure speculation at this point, but the high number of predictions and the coverage they have generated couldn’t have gone unnoticed by the leadership of either company. With a huge payout for Netflix and a surge in stock for Apple, the deal could be win-win. Just what effect such a potential deal could have on subscribers remains unknown.