Oh, and remember when Time-Warner had this great plan to merge with America Online, and what great synergy that was going to create? And remember how that turned out -- especially for Time-Warner employees!
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RBC Raises Price Target on Apple Shortly After Dreaming About Benefits of a Merger With Disney
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I can't imagine how such a merger would utterly destroy the iTunes Store. For that alone, I hope it doesn't happen.
It makes me smile to know there are disney rumors forums Lol. The internet is amazing. Just as silly as macrumors.
That isn't how it works. What are these reserve shares, and how would they be used? Does financing a merger with debt actually sound good to you? Yes, they have more options than a full cash deal (a stock swap being the most obvious), but they also have substantial downsides for stockholders.
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Yes, I also found an article detailing the estimated cost of a cash acquisition being in the neighborhood of $250B. Just pointing out that it wasn't mentioned in this article, as if the cost to Apple wasn't an important consideration.
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A stock swap of this scale represent a huge dilution, even if it's for only a part of the price. That merger had better produce and produce quickly, or the result is a disaster for current Apple stockholders. As mergers often are.
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No, that isn't true. You are talking about a controlling interest, which is virtually impossible to accomplish with a large company, and not a merger in any case.
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Umm, Disney is a good company overall, but their IT is some of the worst in the industry, online services never work like they are supposed to. Apple likewise is a good company overall, but they also are terrible with online services, hardware works well, services, not so much. Merging the two companies wouldn't do very much good under these circumstances and could even be a bigger disaster than the AOL/Time Warner merger was.
I would hate to see Disney Movies Anywhere go to iOS exclusive
Other than that, I still kind of hate the idea of Disney not owning itself
Other than that, I still kind of hate the idea of Disney not owning itself
I think a DC character(?) is more fitting - (Unapologetically) Plastic Man
I'll see myself out....
I certainly wouldn't encourage Apple to do this. But if the market rewarded Apple with $300 billion more market cap, then issuing $300 billion Apple shares to do it would not dilute the current shareholders.
I think the RBC analyst thought was focused on using a lot of cash because Apple invests that money in very modest returning securities. So the cash flow from Disney is supposed to outperform what Apple is currently getting from its cash reserves. I think Apple should stick with tech though and not overnight turn the company into being 1/3 media content and advertising sales focused. Ugh!
In the 10s of billion of dollars category, Exxon/Mobile, Comcast/NBC Universal, AT&T/Bell South.
(Off the top of my head)
That's why mergers so often defy the logic of the markets. The markets currently value Disney's earnings at $180B and not for no reason. If anybody is thinking those assets suddenly become worth $300B because they are owned by Apple then they are really buying into the magic kingdom affect.
Anyhow, I think we agree that the concept is beyond flawed. Apple does need to figure out what to do with their excess cash but they will probably keep to the strategy of making modest acquisitions, repurchasing shares and paying dividends.
Exxon/Mobile is an excellent example. I hadn't thought of that one. I'm not sure how Comcast/NBC ever made it past DOJ review. I know nothing about the third example, so I won't comment on it. I think what I mentioned later is still quite relevant. The numbers needed to justify a >$200b purchase, some of which Apple might not want, are incredible.
Exxon and Mobil were in the exact same business and so were AT&T and BellSouth, so these were consolidations more than they were mergers. Any number of similar examples can be found in the airline industry. Shotgun marriages between companies with dissimilar businesses (and cultures) are often toxic.
Yeah I happen to agree with you. I said Exxon Mobile was an excellent example, because the company did well afterward. I would still prefer that such consolidations not make it past DOJ review. I didn't speculate on the culture clash, because the price tag and the question of what to do with the parks already makes it look infeasible without considering additional downsides.
Mergers in similar business segments make sense because they concentrate the market/reduce rivalry and can then strip out management inefficiencies. Commodities are good for mergers.
Apple does not know how to value a either theme park or a content business, never mind run them. Let's face it Macrumors. There's only so many hours of watching rotating smooth rectangles and playing with thinned polished aluminium blocks... yes, aluminium..., that children are going to be excited about.
Of course, as counter point, there's always premium park bracelets... That is something Ahrendts could really sink her teeth into.
Apple does not know how to value a either theme park or a content business, never mind run them. Let's face it Macrumors. There's only so many hours of watching rotating smooth rectangles and playing with thinned polished aluminium blocks... yes, aluminium..., that children are going to be excited about.
Of course, as counter point, there's always premium park bracelets... That is something Ahrendts could really sink her teeth into.
I hope so. Because if Apple acquires Disney Apple will never be the same company. Media guys in Disney will eventually be in charge of huge portions of Apple's budget and strategy. I like that their acquisitions now are driven by engineers seeing either good tech or smart people.
Disney's internal strategy/M&A team is one of the most prestigious internal groups in the business world. This part would be an upgrade for Apple.
IJ Reilly said:
I mean, this merger doesn't sound great upon initial look, but there's nothing inherently wrong about debt-funded mergers.
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For now Apple only goes outside to buy small building blocks for products they are pursuing already. Huge difference between that and buying into entirely new businesses in pursuit of that mythical synergy.
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Using debt to fund mergers is just raising the stakes, and depending on the extent of the debt, sometimes to life or death proportions. Seems like kind of inherently wrong to me, and if not inherently wrong than inherently dangerous.
They forgot to mention there is also a "greater than 0% chance" the earth will be destroyed by a giant asteroid in 2018. Between this potential merger and the astroid, my money is on the asteroid
They can be if you're over-levering yourself but to say any usage of leverage is dangerous ( I understand even $1 of leverage of riskier than $0) is crazy myopic. You've argued for years on here (along with myself) that Apple's cash position is too large/suboptimal. Well, if you believe that you should realize that optimal capital structures are rarely 100% equity. I'm sorry, but someone who is making $10m per year and chooses to get low-interest financing on a $20k purchase is not dangerous.