Two Deals that Could Shake Up Wall Street
Yorkville Advisors January 8, 2018
There could be some changes in big companies during 2018 that could
have a boomerang effect through major sectors of the market. While no
one knows for sure, there are strong rumors that these deals may occur
before the year is through. Here are the two deals that you may want to
watch for in 2018.
Apple Buying Netflix
Apple stands to benefit from the new tax law that the United States
Congress finally approved in late December 2017. Even before the tax
deal closed, Apple had already brought back over $200 billion of its
stock, and they may choose to return money to the United States after
they work out the deals of the new tax plan. They are poised to become
the first trillion dollar company in history, and acquiring Netflix may
help them meet this goal. One weakness that Apple has had is that their
content continues to lag behind Amazon, and the acquisition of Netflix
would go a long way in solving this problem. Under Reed Hastings’
leadership, Netflix already generates about $10 billion in revenue
annually, and Apple should be easily able to at least double that amount.
The addition of Hastings to the leadership team also add depth and
knowledge to Apple on how to produce or buy content. Including a
complimentary subscription to Netflix for six months or a year could
drive the sale of Apple televisions up as more people than ever before are
choosing to cut the cable plug.
Amazon buying Target
The second deal that many think will happen in 2018 is that Amazon will
purchase Target. Amazon’s closest competitor is Walmart, and the
purchase of Target would let Amazon own about 50 percent as many
brick-and-mortar stores in the United States as Walmart operates since
the company already purchased Whole Foods last year. Despite the fact
that the company would probably have to suffer a big hit to its balance
sheet in order to acquire Target, many believe that the company will do
so in 2018. This would be a signal that Amazon believes that a balance
between online and brick-and-mortar stores is where the future lays.
Target’s main demographic is moms, and it is a market that Amazon
already actively pursues with their prime time videos. Like Walmart,
Amazon would also have the option of offering in-store discounts and
loyalty programs to drive sales up.
Many believe that these two deals are likely to happen in 2018, and it
unlikely that the United States government would take any action to stop
them from being a monopoly. Therefore, watch for them to happen
within the next 12 months.