Business titans Apple and Disney could be merging into one gargantuan company, which experts believe will benefit both companies.
Apple, Inc. and The Walt Disney Co. have a longstanding relationship, personified by the fact that returning Disney CEO Bob Iger was friends with the late Apple founder Steve Jobs.
While Apple and Disney are perceived to be fluttering their eyelashes at each other, any potential merger or acquisition will “almost certainly” be met by pushback and “shareholder litigation,” according to one finance attorney.
Talks of a team-up were sparked again recently when Needham analyst Laura Martin told her clients that an acquisition would make Apple worth 15-25 percent more valuable. So how likely is a merger or acquisition between the two at this time?
Apple and Disney’s history
Steve Jobs is the most obvious link between the technology company and the entertainment conglomerate, being predominantly known as the co-creator, and later the CEO of Apple.
He was also the majority shareholder of the animations studio Pixar, before selling it to The Walt Disney Company in 2006. As part of the deal, Jobs became a member of The Walt Disney Company’s board of directors, a position he held until his death in 2011.
Disney’s acquisition of Pixar almost never happened, as Jobs announced that Pixar would never work with Disney again in 2004 after failed negotiations with former Disney chief executive Michael Eisner. When Iger replaced him in 2005, he mended the relationship and Disney bought Pixar for $7.4 billion.
Iger was later named to the Apple, Inc. board of directors in 2011, but left his position in 2019 as the two companies prepared to compete in the streaming wars.
There is no current crossover in place between content on Apple TV+ and Disney+ (both launched in November 2019). A collaboration between the two would surely be bad news for competitors like Netflix and Prime Video.
A merger between Apple and Disney isn’t just a notion speculated on by third parties, as Bob Iger himself envisaged what a joint venture would look like in 2019.
“I believe that if Steve were still alive, we would have combined our companies, or at least discussed the possibility very seriously,” Iger wrote in The Ride of a Lifetime: Lessons From 15 Years as CEO of the Walt Disney Company.
Disney’s Bob Iger is, in many ways, the connective tissue.
Early on as CEO, he mended fences with Steve Jobs and Pixar.
After the acquisition, Jobs became Disney’s largest shareholder and a board member.
Here’s Jobs on Disney (before the Pixar deal):pic.twitter.com/k0jXPDdy9P
— Jon Erlichman (@JonErlichman)
Drawing on the two companies’ “connective tissue,” Bloomberg‘s Jon Erlichman wrote about the various areas of crossover in a Twitter thread on Sunday. He pointed to Apple’s commitment to spending $1 billion on theatrical movie release, Disney’s pulling back in the Metaverse, while Apple is ready to launch its own mixed reality product.
Under Iger’s reign, Disney has acquired the likes of Pixar, Marvel, Lucasfilm and 21st Century Fox—but perhaps it’s Disney’s turn to be acquired itself.
Apple, Inc. and The Walt Disney Company did not respond to Newsweek‘s requests for comment.
Apple and Disney’s current value
While Disney is an iconic brand and an extremely successful business, its size is eclipsed by Apple, Inc.
Apple is considered the largest technology company in the world by revenue. In 2022, its revenue totaled $394.3 billion, and last month it was considered the largest company in the world by market cap, at a price of $2.620 trillion.
By comparison, The Walt Disney Company had the 55th largest market cap in March 2023, with a value of $182.56 billion.
While both companies are massively successful, a merger would see profits soar, according to business expert and consultant Christina Curtis.
“Given their complimentary customer footprint, merging these two powerhouse businesses would likely drive substantial growth,” the founder of Curtis Leadership Consulting told Newsweek. “Based on the slight bump in stock price increase for both companies, it appears investors would agree.”
Last week both companies stock prices increased by around 1 percent each after Needham’s Martin wrote to her clients about a merger.
“It’s easy to imagine how they could seamlessly weave their technology and services together, capturing more mindshare from consumers who are eager to be a part of the entertainment value both Apple and Disney bring,” Curtis said.
What’s stopping Apple and Disney from combining?
As Iger himself suggested, there has been less of an appetite for a Disney and Apple merger since the death of Jobs in 2011.
When both companies entered the streaming wars, it seemed that the two were further apart than ever. However, the two companies each have complimentary qualities that could benefit each other, according to Beverly Hills finance attorney Chris Manderson.
“The thing that drives [mergers and acquisitions] is that it’s easier to buy something than build it. Disney is a major property owner, but its content will be driving this merger. Apple has the platform and the distribution, while Disney would be providing the content,” Manderson, a partner at Ervin Cohen & Jessup LLP told Newsweek.
While some see it as a match made in heaven, major business collaborations don’t always work out the way people hope for. Manderson pointed out that AOL and Time Warner found synergies to be difficult.
“Disney has successfully conglomerated a lot of companies, but they’ve all been within the entertainment industry,” he said. “Here, they’d be merging with what’s essentially a hardware company. It’s hard to say whether that would work; the reason mergers most often fail is that they fail to integrate their corporate cultures and their operations.”
He also warned that any attempt to combine with Apple would be met with legal opposition.
“Assuming Disney is the target, what happens every time there’s a public company acquisition is the sellers’ Board of Directors gets sued for breach of fiduciary duty. There will always be allegations that they didn’t run a proper sale process, that they’re selling the company too cheap and screwing the shareholders,” Manderson said.
“There will almost certainly be shareholder litigation, but it’s unlikely it would put a stop to a potential acquisition. They may sue for an injunction to stop the acquisition, but in reality, it will be a shakedown to extract money from the board in legal fees. These lawsuits almost always settle, typically with some minor adjustment in the purchase price and some additional SEC filings.”
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