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Here we go again; Wall Street analyst touts a purchase of Disney by Apple

By Alan Friedman

Published: Mar 30, 2023, 3:21 PM

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Apple

Can you imagine Tim Cook wearing Mickey Mouse ears this June at WWDC? It seems that every year the rumor mill comes up with speculation about Apple buying Disney. Last November, past and current Disney CEO Bob Iger (who left Disney and made a triumphant return somewhat similar to Steve Jobs' Apple journey) said that any report of an Apple-Disney deal was "pure speculation."

Needham analyst recommends that Apple purchase Disney in a deal that could be worth $200 billion

The latest talk of such a deal comes from an analyst named Laura Martin who works for a securities firm by the name of Needham. According to SeekingAlpha, Martin says that Apple and Disney "are worth more together than separately." She cites the 1.25 billion "unique consumers" that use Apple's products and services, and the 570 million consumers that Disney connects with every year.

Apple and Disney already have a relationship

She also writes that the strengths of each company complement the other. Apple, she notes, is skilled at distributing content to its "unique and wealthy users" through the 2 billion iPhone and iPad units that Apple customers own. Disney, on the other hand, has a great reputation for creating content franchises that get distributed over digital screens worldwide "as well as in the physical world." Looking at this analysis, one could come to the conclusion that an Apple acquisition of Disney might work.

Martin adds that both Apple and Disney are "marketing juggernauts." They both have some of the most popular brands worldwide allowing them to charge premium prices, and the two firms each have dedicated fans willing to spend on products and services the two companies offer.

But any such deal will be expensive for Apple. The largest deal ever completed by Apple was its purchase of Beats Audio in May 2014 for $3 billion. Apple's market capitalization is $2.6 trillion while Disney's market value is $178 billion. Throw in a 25% premium (and that might not be enough for a unique company like Disney) and Apple will pay $222 billion to buy Disney. Financially, it is doable but Apple might have to take on some additional debt to make this purchase.

If Needham's Martin were to look at Apple's acquisition history, she'd find that the company usually buys smaller companies with products that can be used on its devices in the next year or two. For example, in July 2012 Apple bought biometrics firm AuthenTec which led to the development of Touch ID. A year later, the iPhone 5s debuted Touch ID. In April 2010, Apple bought Siri for $200 million and a year later the digital assistant made her first appearance on the iPhone 4s.

Thanks to Pixar, the late Steve Jobs had a strong connection with Disney

Still, the Needham analyst said that an Apple purchase of Disney makes sense for the tech giant and its stockholders. She says that combining Disney's content with Apple's products could potentially result in a 25% hike in Apple's market value.

There are some connections between Apple and Disney. The late Steve Jobs was not only a member of the Disney board, he also was Disney's largest stockholder at one time. Jobs was one of Pixar's three founders and was CEO of the computer animation studio when it was sold to Disney in 2006 for $7.4 billion in an all-stock deal.

In the past, some analysts said that Apple would be able to build Apple Stores in Disney parks giving such retail locations the ability to attract millions of potential customers every year. But besides making what would be a company-changing behemoth of a transaction, it isn't clear whether Apple has an interest in Disney. And while such a deal might pay off for Disney stockholders, would executives at the Burbank headquartered company put up with their beloved characters playing second-fiddle to Apple's tech products?

Apple's shares have been mildly trending up over the last few days and at the 4 pm EDT close today the stock was trading at $162.36 up .99% or $1.59. Disney opened at the high of the day, possibly due to Martin's comments, and closed at $98.10 up $1.23 or 1.13% today.

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Alan, an ardent smartphone enthusiast and a veteran writer at PhoneArena since 2009, has witnessed and chronicled the transformative years of mobile technology. Owning iconic phones from the original iPhone to the iPhone 15 Pro Max, he has seen smartphones evolve into a global phenomenon. Beyond smartphones, Alan has covered the emergence of tablets, smartwatches, and smart speakers.