Tesla Listed Among Potential Takeover Targets For Apple

5 months ago by Steven Loveday 33

If Apple acquired Tesla, it would not only be immediately entering the electric and autonomous automotive industry, but also the “green energy” business.

On a recent list of potential takeover targets for Apple, Tesla is one that has always seemed like a top choice.

We have heard this before … Tesla and Apple should join forces, rather than poaching one another’s employees, or becoming direct competitors in the future. Apple has been talking about jumping into the auto industry for some time now, with its very secretive ‘Project Titan.’ It seemed for awhile that maybe this was going away, but now the company is openly testing autonomous cars in California. Apple also started its own energy division in the recent past.

Perhaps Apple intends to produce an autonomous driving system that is substantially better than Tesla Autopilot, to use as bait in the acquisition process.

It seems that if Apple has the choice to go head to head with Tesla, or just buy the company out, the latter would make much more sense. Going to bat against Tesla, and Elon Musk, in an industry in which you have no prior footing, may be a bit risky. But heck … Apple is sitting on $250 billion in free cash. Hypothetically, the tech monster can acquire just about anyone it wants or needs, and do just about anything it chooses.

Citigroup published a list of seven companies that are potential Apple takeover targets, including Tesla, Netflix, Hulu, Electronic Arts, Activision Blizzard, Take Two Interactive Software, and Walt Disney. Jim Suva, an analyst for Citigroup, told his clients that over 90-percent of Apple’s free cash is sitting in overseas accounts. As part of a new tax plan, it would cost the company a 10-percent repatriation tax to access the then $220 billion in monies to acquire virtually any company it wants. He explains:

“Since one of the new administration’s top priorities is to allow US companies to repatriate overseas cash at a lower tax rate, Apple may have a more acute need to put this cash to use.”

President Donald Trump’s proposed tax plan will let multinational companies reel in overseas profits at a 10-percent tax rate, as opposed to the 35-percent that it currently costs. If Trump’s plan works out, companies will be smart to take care of any acquisitions or buybacks, utilizing this money while it costs them less.

Suva considered strategic fit, global scale, transaction size, few non-strategic assets, and likely impact on Apple’s share price, when choosing the top companies for the list.

Despite continued talk of this idea, both Elon Musk, and Tim Cook have said publicly that there is no plan to join forces.

Source: Reuters

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33 responses to "Tesla Listed Among Potential Takeover Targets For Apple"

  1. Alaa says:

    Why not Ford or GM or both.

    1. chris says:

      Now that makes a lot of sense. As much as I love Tesla and being a model 3 reservation holder, I wish Tesla all the best and success in the world. But I really do not believe its current market valuation.

      1. Rich says:

        It doesn’t make sense to buy a legacy automaker. Apple would want to build EVs only. Legacy automakers would have all the baggage of ICE manufacturing. It would be easier to start from scratch than change an entrenched work force.

    2. Spider-Dan says:

      Unlike Ford or GM, Apple has more cash-on-hand than God, and can actually afford to buy Tesla.

      1. Kdawg says:

        I think he was suggesting Apple buy Ford or GM.

        1. ffbj says:

          Slim Hopes: Why, sure, ya’ll could buy ole’ Blue here, ole’ Blue lifts his head, when he hears his named called and then drops it back down on the porch.

          He was a good huntin’ dog in his day, and he call still tree a coon in record time, though he gets tired after a spell.

          Man lookin’ for a dog:
          What do you want for him? Seems like he got a lot of ticks, fleas, and a few scars, too many.
          Well, he been in a few scraps in his day. An he stuck his nose into a few holes he should not have, but he has lots of experience.
          I could part with him for say $62 Billion.

          Is that in U.S. dollars?
          Why course it tis, as long as it has Jefferson Davis’s picture on the face.
          Seems a bit steep, I’ll let you know.

        2. Spider-Dan says:

          Ironically, Apple doesn’t have enough money to buy GM or Ford. Both of those companies have well over $200 billion in assets.

          1. Vexar says:

            Apple doesn’t have the capital to acquire Tesla, either. This is an inane article. It was interesting five years ago.

          2. Alonso Perez says:

            What about liabilities? If the 200 billion number was real, you could buy them, liquidate, and turn a 4x profit.

            Apple can afford them.

            But Apple won’t buy any of them because it is used to near 40% gross margins, and no car company will ever deliver anywhere near that. So Apple would have to take a massive gross margin hit.

            Another problem, Apple doesn’t like to manufacture. Even for their very limited run Mac Pro, built in the US, they outsource to Foxconn.

            Apple is just a cash cow now. You knew that was true when Buffet bought stock. That’s how Cook likes it, and that’s how it’s going to be till their sales model breaks. With Samsung’s exploding phones, Apple is under little external pressure to change.

            1. Pushmi-Pullyu says:

              “…Apple won’t buy any of them because it is used to near 40% gross margins, and no car company will ever deliver anywhere near that. So Apple would have to take a massive gross margin hit.”

              Bingo.

              It really amazes me how this nonsensical idea persists. But at least it’s not as absurd as claiming “fool cell” cars are the future of automobile tech! 😀

            2. Chris O says:

              If 40% return investments grew on trees Apple wouldn’t be sitting on $250 billion worth of cash doing close to zero percent interest now would they?

              It really amazes me how this nonsensical idea that Apple would only invest in non existent 40% return investment opportunities persists.

              1. Alonso Perez says:

                It persists because Apple has made it persist by rigorously maintaining, for going on maybe 50 quarters now, a very narrow target for gross margins. Apple is trapped by its own money-making efficiency. There is almost no concievable major merger they could do that increases their return on equity and most would decrease it, plus add risk.

                If there was another Steve Jobs (or a Musk), in consumer electronics, Apple would be in trouble because its innovation pace is slow and without focus. But there isn’t one, and Musk is dedicated to transport, energy, and space. So Apple can be a cash cow for years and years, with impecable operations (Cook’s specialty), but mediocre product development.

                Cook dealt with Jobs for 13 or 14 years. Why, now that he is a the top of his game and making boatloads of cash, would he want to ride another tiger like Musk? Cook likes order and harmony. He likes a well-oiled cash machine and as few surprises as possible. I just don’t see him buying Tesla.

            3. Spider-Dan says:

              Never before have I heard the sale of $200 billion dollars in assets described so briefly and simply: just “liquidate!”

              First off: Apple doesn’t have (access to) enough cash to buy up the necessary GM stock AND buy their assets. But even if they did: the kind of losses they would take on buying GM’s assets and immediately “liquidating” them would make this the dumbest transaction in the history of civilization.

              They would get more value out of literally setting money on fire.

              1. Alonso Perez says:

                And that’s precisely the point. Those assets are not worth 200 billion because they cannot be sold at that price in any relevant timeframe.

                This is why the GM stock price ignores any such valuation. GM, assets and all, is worth what the stock price says it’s worth. That’s what the stock price means.

                1. Spider-Dan says:

                  No, GM’s stock is worth what the stock price says it’s worth.

        3. JustWilliamPDX says:

          Maybe. Then again, this time last year Alaa not only suggested, but argued and INSISTED that the Model 3 was going to be produced in 2016, against ALL evidence to the contrary. It was truly baffling. I haven’t taken his “suggestions” seriously to this day.

          1. Pushmi-Pullyu says:

            Sometimes I wonder if Alaa is just pulling our legs. How could any one person be that wrong — or “not even wrong” — so often on so many different subjects? If his posts are real… then do his guardians let him go outside without a keeper?

          2. Alaa says:

            I can’t tell you how happy I am to see that you mentioned me by name and remembered what I said. Thank you.

            As far as I can tell though Tesla did produce a Model 3 in 2016. Yes I said a.

            Here is my proof.

            Even though I said a, it is highly unlikely that this was the only Model 3 they produced.

            Now let us be practical here, even if I was so terribly wrong by 6 months, I ask you what is the big deal here?

            Rest assured that Tesla will sell the Model 3 to many people in 2017. You can see I am trying very hard to avoid exact dates so as not to make you unhappy; especially after you making me very happy that you remembered what I said and mentioned me by name.

            Thank you and best regards from Cairo Egypt.

    3. Bacardi says:

      Neither want to move on from the “strong franchise dealership network” nor do they even want to sell EVs…

  2. unlucky says:

    I don’t think this is the right move for Apple. Tesla is nothing without Musk and Musk isn’t going to stay if the company is bought. He likes being his own boss.

    1. georgeS says:

      I agree unlucky,
      The only way I see this happening is if something very bad happens to Tesla and they get close to bankruptcy.

  3. Spider-Dan says:

    Tesla and Apple are a match made in heaven. Their market strategy is nearly identical.

    1. Bacardi says:

      If you exclude the model 3, then there are some similarities yet it doesn’t really make sense…
      Apple has had a string of fails including project titan…

    2. Pushmi-Pullyu says:

      “Tesla and Apple are a match made in heaven. Their market strategy is nearly identical.”

      A “match” made in heaven? No, that would be a pretty extreme mismatch.

      Tesla: Mass producing cars, heavy industry, slim profit margin

      Apple: Mass producing consumer electronics, light industry, fat profit margin

      Very different, and I’m sure Apple realizes this.

  4. Bacardi says:

    Apple is already “in” the automotive business with Apple CarPlay, they can extend that to offering assisted driving…

    Higher odds Apple will purchase Disney and/or Netflix and/or Hulu…

  5. Someone out there says:

    With the current valuation of Tesla it would take a long time for that investment to pay off.

  6. Someone out there says:

    I don’t really see why Apple would purchase Electronic Arts, Activision Blizzard or Take Two either. Apple isn’t much in the gaming business.

    1. ffbj says:

      I think that would make more sense.

  7. Jason says:

    Most people will not care who owns the company so long as they like the product and can afford it. Who ever owns Tesla, so long as they make an awesome car then people will buy it.

    Note consider this, what sort of social entity is Apple, sitting on $250bil cash. I know that is what private industry and capitalism is all about, but that is a lot of resources that could be put to very good use around the world. Maybe that is a more important conversation than whether Apple buys Tesla.

  8. Michael Will says:

    I really hope tesla never sells out to apple, apples engineering sucks worse every year and they are going to ruin the potential. Tesla needs to defend itself against a takeover and then pass them in the fast lane.

  9. Pushmi-Pullyu says:

    “Apple has been talking about jumping into the auto industry for some time now, with its very secretive ‘Project Titan.’ It seemed for awhile that maybe this was going away, but now the company is openly testing autonomous cars in California.”

    Yes, it seems quite likely that Apple wants to make systems for autonomous cars, just as Intel makes computer chips. I can certainly see Apple making computers and software for autonomous driving, and quite possibly sensor suites, to sell to auto makers. Future EVs may well have “Apple inside”, just as some personal computers have “Intel inside”.

    But asserting that Apple is going to start building entire cars just because they want to make autonomous driving hardware and software, is as silly as claiming Sony is going to build entire cars just because they make automotive infotainment systems.

    This rumor isn’t any more likely to come true than it did the last time. I can see at least a faint possibility that Tesla might be willing to sell its solar energy division to Apple… but why would Apple want to buy something that has been a money loser (when it was SolarCity), and quite possibly might never make money for Tesla?

  10. Dav8or says:

    Apple better buy something, or do something because as a company they are becoming pretty lame pretty fast. This coming from a decades long Apple fan. IMO, since Steve died the company has been on life support with all the money in the world to keep the swindle going.

  11. Priusmaniac says:

    Since we are about to see the emergence of personal robotics, Apple would make a much better move by investing into that new area instead of taking over somebody else’s established electric car company. Personal robotics needs 3d vision systems and a whole new set of micro mechanics systems. The best start would be a take over of Boston dynamics, something Google already did, but Apple could still buy it from them since Google doesn’t seem to extract the value from it. Personal robotics is a telebot system at your service that can do whatever you want at a distance. You literally have a telepresence augmented with real mechanical arms and legs to act upon objects instead of just seeing things like you do with Skype or a flying drone. I am convinced it is the next big thing and Apple is perfectly positioned to succeed in this. Sony and Knightscope have started making baby steps in this direction but Apple could make the next giant leap that await being made. A true telebotic presence in humanoid form that you can direct via a 3d helmet while being helped by partially autonomous assistance systems.

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