Laura Martin of Needham & Company says the two companies would be worth more together than apart.
Disney (DIS) – Get a free reportCEO Bob Iger has said that if it weren’t for the death of Steve Jobs in 2011, his company might have merged with Apple. (AAPL) – Get a free report.
Now, a Needham & Company analyst suggests that Apple would increase in value by as much as 25% if it bought Disney using Apple shares.
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“Offensively, as a driver of upside value, strong distribution and world-class content are complementary networks. In other words, we believe they are worth more together than separately.” martin said in a note, according to Markets Insider.
Apple could monetize its customers who use Apple devices for an average of four hours a day, Martin said. The company has 1.25 billion customers with 2 billion devices, she said.
Apple already has several subscription services, including Apple Music, Apple TV+, Arcade, Fitness+, and Apple News.
“What Apple does best is distribute content globally to 2 billion high-end mobile devices owned by 1.25 billion unique and wealthy users.” martin said. “And what Disney does best is create franchises of AAA content, which it distributes globally across all screens, as well as in the physical world.”
Both Apple and Disney have a loyal following around the world, premium pricing power and a rich consumer base, according to the note.
“This implies that these key assets and value drivers are strengthened and not diluted if the two companies come together.” martin said.
“I think Apple is doing a very mediocre job of streaming,” Martin said on CNBC on March 30, according to Privileged information of the markets. “They just said they were going to do a billion dollars in movie financing. That’s a bit ridiculous, because these companies that are competing in content businesses spend $30 billion a year. Even Netflix spends $20 billion a year.”
“Guess what the Walt Disney Company has,” he continued. “A hundred years of some of the greatest IP franchises, characters and movies in the world. So owning that in perpetuity would actually lower Apple’s cost.”
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