Could Apple use its massive cash reserve to take over Tesla?

One Citi analyst is suggesting exactly that, and a whole lot more.

Citigroup listed seven companies as potential takeover targets for Apple Inc, including Tesla, Netflix, and Walt Disney, as a way to put its cash hoard of more than $250 billion to work. With over 90 percent of its cash sitting overseas, a one-time 10-percent repatriation tax would give Apple $220 billion for acquisitions or buybacks, Citigroup analyst Jim Suva said in a note to clients.

US President Donald Trump's tax blueprint, which was unveiled last month, proposes allowing multinationals to bring in overseas profits at a tax rate of 10 percent versus 35 percent now. "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," Suva said.

Tesla made headlines last month for its massive market cap of about $51 billion. At the time, that meant Tesla was worth $1.7 billion more than its General Motors, America's biggest automaker. Wall Street's valuation of Tesla is based mostly on potential, not on the products and services it has, so far, delivered to customers.

Apple has shown clear intentions to enter the automotive segment, with a secretive group of engineers working under the Project Titan label. Apple was recently granted a permit to begin testing self-driving automobiles in California.

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.

Under pressure from shareholders to hand over more of its cash hoard, Apple recently boosted its capital return program by $50 billion, increased its share buyback program by $35 billion and raised its quarterly dividend by 10.5 percent.

(Reporting by Derek Francis in Bengaluru; Editing by Anil D'Silva. Additional reporting by Jeremy Korzeniewski.)

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