5 Reasons Apple Won't Buy Disney
Walt Disney Co (NYSE: DIS) shares were up 0.7 percent on Thursday following a new report from RBC Capital discussing all the reasons why an Apple Inc. (NASDAQ: AAPL) buyout of Disney would make sense. While Disney investors would certainly love a buyout at a premium to market price, investors should make sure not to overlook the caveats RBC provided in its note as well.
Analyst Amit Daryanani is far from convinced a deal will happen.
“We see a confluence of events that make an acquisition of DIS a ‘greater than 0 percent’ probability event (while odds are low),” Daryanani said.
5 Arguments Against The Buy
In addition to his arguments in favor of a merger, he also included a list of five things naysayers could point to as evidence that Apple will never buy Disney:
- Apple’s largest past buyout has been Beats Inc at only $2.2 billion. Disney’s market cap is currently $180 billion.
- A Disney buyout would be a departure from Apple’s recent business strategy.
- A Disney buyout would conflict with Apple’s long-term goal of being a one-stop shop for all digital media content (not just Disney’s).
- There would be integration risk.
- A Disney buyout might signal to investors that the iPhone business is reaching its maturity.
Rumors of potential mega-mergers make for fun, attention-grabbing headlines. But while these types of deals certainly occur from time to time, traders should keep their expectations in check and understand that a Disney buyout is a long-shot at best.
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Image Credit: By Bryan Gosline - Flickr: Snow White!, CC BY-SA 2.0, via Wikimedia Commons
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