Arthur J. Villasanta – Fourth Estate Contributor
Seattle, WA, United States (4E) – The buzz is growing that Amazon (the world’s largest internet company by revenue) this year will acquire Target Corporation, the second-largest discount store retailer in the U.S. behind Walmart, while Apple will make a serious play to take over streaming media giant Netflix.
Jeff Bezos’ next big move will be to target Target, which will make an ideal partner for health food supermarket chain Whole Foods that Amazon acquired in 2017. The target of these twin moves is, of course, Walmart.
Whole Foods and Target combined will have over 2,300 stores and about $176 billion in U.S. revenues. This total, however, pales in comparison to Walmart with its 11,695 stores and $315 billion in U.S. sales.
But the combination of both Whole Foods and Target under cash-rich Amazon ($136 billion revenues in 2016) will prove a far worthier opponent for Walmart.
As for Apple, financial analysts at Citigroup, Inc. or Citi said the chance of the tech giant acquiring Netflix now stands at 40 percent. Netflix is seen by Citi as the company Apple would be most likely to buy.
Citi said Apple needs Netflix to rejuvenate iTunes, which has been losing customers to services like Netflix, Amazon or Hulu.
Apple buying Walmart became more probable with the passage by the U.S. Congress of the Tax Cuts and Jobs Act of 2017 whose tax cuts will hugely benefit big business.
The cut in corporate taxes, along with a one-time allowance for companies to repatriate cash stored overseas without paying huge penalties to the U.S. government, will give Apple a lot more cash to buy Netflix and other companies.
Apple has about $252 billion in cash, much of it stashed abroad in low-tax countries like Ireland. Apple has been unable to repatriate this haul into the U.S. because of the huge legal and fiscal penalties it would have to pay.
Apple has avoided repatriating cash to the U.S .to avoid paying high taxes. Over 90 percent of Apple’s cash is kept overseas. A one-time 10 percent repatriation tax would give Apple $220 billion for M&A or buybacks.
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