ATVI Stock Acquisition 💰 (AAPL and DIS to Buy ATVI?)

Will AAPL Stock or DIS Stock buy ATVI Stock? Is ATVI Stock a buy in 2019? Will Apple or Disney acquire Activision Blizzard? There's been a lot of chatter about some possible merger or acquisition news with ATVI - and there may be some truth behind this. I've made a few videos on ATVI on why I believe it's severely undervalued here under $50/share, and if these rumors are true - it seems like 2 large companies agree with me.

1) Disney Stock (DIS Stock)
I'm not sure if this would play out - but here's the case for it. Many don't know but DIS did try to enter this space a while ago, and purchased popular titles like Playdom and Club Penguin. They then launched something called Disney Infinity - which was a huge customization universe of imagination known as the "Toy Box" and was filled with characters from popular Disney, Pixar, Marvel and Star Wars movies. They released 3 iterations of this sandbox, but then in just 3 years, they shut down the service and discontinued it. Their model from then on has been to license out the characters to companies like EA - so they collect royalties from all sales of games containing any Disney content.

So why ATVI? Disney has an existing partnership with ATVI, and the 2 companies do work well together. ATVI is a world recognized brand that has extremely popular titles, and Disney of course doesn't need any introduction. With their brands and characters, integrated into popular games that ATVI owns, there could be an opportunity for a lot of $$ to be made especially with the rise of esports which is a new growth vector for all gaming companies including ATVI.

The problem here is that ATVI is currently valued at around $37B - so that would be a lot more debt for DIS to take on to acquire them. ATVI is a strong business financially, and they do have a +ve net income so it could pay off over the long term but considering DIS just closed a deal with FOX for around $71B, it's highly unlikely they will look to make another acquisition anytime soon. So I think the likeliness of this merger happening anytime soon is extremely low - but it could be something in the future to considering once the Fox/Disney integration has completed.

2) Apple Stock (AAPL Stock)
AAPL just reported their earnings - and the company is now sitting on over $200B in cash. I believe if they paid down any debts and such, that still leaves them with over $100B cash to use. Either way - a $37B purchase, even if they raise the premium to $50B, would be very comfortable for AAPL. So this is a situation completely different from DIS - where AAPL would not need to take out debt for this, making this option more likely. AAPL recently announced a gaming platform called Apple Arcade - which will allow anyone with an Apple device to play 100s of games. This is a completely cloud based platform on a subscription basis, and it shows AAPL's interest in entering the gaming space.

Considering ATVI has extremely popular franchises like COD - wouldn't it make sense for them to purchase ATVI and have COD as an exclusive title on Apple Arcade? This would be a huge difference maker for AAPL vs GOOGL's Stadia - and would make it more likely for people to switch to the AAPL ecosystem. You could make the argument that TTWO is also a target for AAPL using this logic - but I don't believe TTWO is undervalued currently. ATVI is trading cheaper than TTWO on a forward PE basis - and I believe for a high growth company, ATVI should be much higher. So this may be an opportunity for AAPL to enter the gaming space strong, with blockbuster titles to help break into the esports industry which is expected to be well over a $1B industry.

Will either of these acquisitions actually happen? I think the likeliness is very low but one of the existing players in this space (TCEHY, EA, TTWO) is more likely to merge than to have a new player come in and acquire them.


#ATVI #Apple #Disney #PositiveInvesting


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