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Tesla Ripe for Takeover by Apple, Analysts Claim

CEO Musk sweeps aside idea saying it isn’t in the cards.

by on May.08, 2017

Tesla CEO Elon Musk says Apple makes fine phones and laptops, but acquiring the Palo Alto, California EV maker isn't going to happen.

Apple, despite the various challenges it might face, is sitting on nearly a quarter of trillion dollars, giving it ample resources to mount a takeover of virtually any company in the world and analysts at Citigroup. have concluded on the possible targets is Tesla.

Elon Musk, Tesla’s founder and CEO, brushed aside the speculation about a possible Apple-Tesla alliance, saying it wasn’t in the cards. “They make good phones and laptops,” noted Musk, adding he personally uses Apple products.

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But he shrugged off suggestions during the analysts call that followed the release of Tesla’s financial report for the first quarter in which losses grew by 40% even though the electric-vehicle company’s revenue doubled.

Tesla, which is in the midst of a dramatic expansion that Musk has promised would push the company’s production to 500,000 units in 2018, is chronically looking for capital to finance its ambitious plans.

(Musk predicts Tesla will build 100K vehicles in 2017. Click Here for the story.)

However, various analysts have suggested that ultimately Tesla will become a takeover target for an automaker or tech company. For automakers, the acquisition of Tesla would automatically expand the company product line, while for a tech company the acquisition of Tesla would automatically expand its technology portfolio and product line.

Meanwhile Apple is sitting on a huge cash stockpile and Apple CEO Tim Cook has said that the auto industry represents a lucrative target for a company such as Apple.

While Apple has said little concrete about its automotive initiatives, it recently broke cover about a self-driving vehicle program when it applied for permits from the California Department of Motor Vehicle to test autonomous vehicles on public streets.

Apple is also cash rich and suspected to be looking for venture that could help insure the company’s future growth.

(Click Here to see what was behind Tesla’s bigger-than-expected Q1 losses.)

Citigroup analyst Jim Suva said in a note to clients that seven companies might be potential takeover targets for Apple Inc., including Netflix, Walt Disney and Tesla Inc., as a way to put its cash hoard of more than $250 billion to work.

The other potential acquisition targets include video game developers Activision Blizzard, Electronic Arts and Take Two Interactive Software as well as video streaming service Hulu.

The analyst said the targets were screened considering five criteria – strategic fit, global scale, transaction size, few non-strategic assets and likely impact on Apple’s share price, according to Citigroup.

(Musk lays out plans for “Boring” company. Click Here to see how it plans to change the way we travel.)

With more than 90% of its cash sitting overseas, a one-time 10% repatriation tax, which is now on the table in Washington D.C. and has support from both Republicans and Democrats, would give Apple $220 billion for acquisitions or buybacks.

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