Insight Bite: Will Apple’s $245 billion cash import turn into a M&A bonanza?

Apple will bring its $245 billion overseas cash stash home to the US – but what will the company spend all that money on?

Apple has said that it will pay $38 billion on taxes out of the cash import, and $30 billion will go towards capex such as a new corporate campus and expanding its data centres. Commentators have suggested Apple will also use a lot of the stash to buy back stock and pay dividends.

But even so, there is bound to be some left over to go shopping.

You could buy a lot of very interesting companies with that kind of money, maybe Apple could splash out and buy a hot property like Netflix, valued at $70 billion? Or Tesla, assuming the market could agree on what the futuristic car company might be worth. Last year, Tesla was tagged at a market cap of $51 billion, although reports claimed this could become multiplied by 2020. Any potential deal would have to price that in.

But the chances of Elon Musk wanting to sell are slim and Apple is far more likely to buy something a bit smaller. Loup Ventures managing partner Gene Munster wrote in a blog post that he figures Apple has a cap of about $5 billion for a single deal. Magic Leap may fit the bill for that: valued at $6 billion, the Google-backed startup plays right into the augmented reality narrative that Tim Cook has been pushing.

Another option for Apple could be to buy further into healthcare. Munster suggested that Apple Watch and its ecosystem would be bolstered by Peloton, which is an interesting idea indeed. $1 billion business Peloton is the maker of internet-connected indoor cycles, which has grown by more than 200% per year since making its first sale in 2014 and taken on something of a cult status.

Whatever Apple does, the market will be watching closely for any and all hints as to where the trendsetter is going next. Whichever lucky startup will see its payday come up, you can bet its peers will be cheering too.

About Acuity Advisors

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