According to a recent report from the New York Post, it has been revealed that bankers at Goldman Sachs (NYSE:GS) are urging tech giant Apple (NASDAQ:AAPL) to make a rival bid for Time Warner (TWX). Last week U.S. carrier AT&T Inc. (NYSE:T) announced that it was acquiring the media/entertainment giant for $85.4 billion. The blockbuster deal, wherein AT&T is expected to pay up to $110 a share per TWX share in cash and stock, would allow Dallas-based AT&T to gain access to a $60 billion multimedia content empire, including HBO, CNN, TNT and film studio Warner Bros. However, the deal with both presidential candidates raising alarms over it will first have to go through heavy government scrutiny before it closes. So, given the fact the merger is far from final, another bidder can give AT&T some serious competition.
“They are freaking out trying to convince Apple to come in,” The Post said, explaining that Goldman was “left on the sidelines” in advising on AT&T’s agreement to merge with Time Warner.
Apple late last year explored the possibility of buying Time Warner with Apple senior VP of software and services Eddy Cue suggesting the idea at a meeting with Time Warner’s head of corporate strategy, Olaf Olafsson.
Apple has long been rumored to want to launch a skinny TV service for its Apple TV product and other Apple devices. So it came as no surprise when three days after AT&T announced its merger with Time Warner, Apple CEO Tim Cook said he is open to making a large purchase of his own.
When asked about his strategy around larger acquisitions during the company’s Q4 earnings report, Cook said, “We’re open to acquisitions of any size that are of strategic value where we can deliver better products to our customers and innovate more. We look at a whole variety of companies and, based on that, we choose whether to move forward or not. We’re definitely open and we definitely look.”
“I would confirm that television has intense interest with me and many other people here. In terms of owning content and creating content.”
News of a potential acquisition, which is worth noting- for the time being is just a rumor, will certainly please Apple shareholders who are looking for Cupertino to expand into other areas for revenue growth, growth that should reflect in the stock’s price-per-share.
Apple’s stock rose 1 percent to $113.77 at the close in New York yesterday. This morning ticker is down by 75 cents. The $603 billion market cap company, currently with a trailing-12 and forward P/E of 13.69 and 11.31, respectively, has now lost nearly 5 percent year-over-year, while gaining more than 8 percent year-to-date.
Apple has a median Street price target of $133 with a high target of $185.