Why a tax implication might be driving an Apple/Beats acquisition


Corporate M&A decisions are increasingly being driven by offshore tax policy. It’s hard to argue the business logic of using offshore income to acquire foreign companies versus bringing the money back into the U.S. for a domestic acquisition.

Following the rough tax math of a foreign acquisition, Apple’s $3.2 billion bid would really be more like $2 billion if the transaction could take place in Ireland. Considering the fact that Apple currently has approximately $54 billion in cash parked offshore, the benefits of doing a foreign acquisition over repatriating that cash back into the U.S. become even more apparent.

Interesting conjecture.

  • Still waiting for someone other than FT to even say they have a source on this deal. So far, this looks like complete bullshit.

    • JohnDoey

      The value of Beats has been set at $3.2 billion, though — when they were valued at $1 billion tops before this rumor. It’s almost as if the people behind Beats were trained in the music industry and know how to generate hype.

  • JohnDoey

    repatriating that cash back into the U.S.

    The cash was never in the US, so it can’t be “repatriated” or brought “back into” the US. The cash that Apple has in countries outside the US is cash that Apple earned outside the US. It was not taken out of the US. If Apple Canada makes a billion dollars this year, the US has no right to tax it or expect it to be added to the US economy. This entire issue is a farce predicated on the culturally imperialist idea that the US is the boss of the world, rather than just one of about 200 countries in which local people are working, earning, and paying taxes on economic activity that occurs within that country.

    • collider

      Apple is a US based company, so any money brought back to the US by the US based company is considered by US tax law “repatriated”. Has nothing to do with being the “boss of the world” or any other such drivel. Are US tax laws BS? Hell yeah. But that’s a whole different conversation.

  • tylernol

    so is Forbes a reputable source of insight again?

  • arcsine

    Strange how the ‘conjecture’ about corporations M&A decisions tending toward foreign acquisitions by ‘offshore tax policy’ is built around a ‘Hot Topic’ Apple story… since Beats Electronics is a Santa Monica LLC and wouldn’t be a foreign acquisition.

    Dave Mark, isn’t this just everyday common Apple ? Maybe they tied in other Apple acquisitions but the Beats Electronics angle shouldn’t have been the hook here.

  • collider

    Yeah, it’s an interesting conjecture, but the whole idea is based on Apple otherwise bringing money in from overseas… which would make no sense whatsoever. The entire accounting team would get fired if they did that.

  • Uh…Apple has quite a bit more than $54B parked offshore. It’s $132.2B, Forbes contributor guy…


  • monkeyrun

    If you have to look THAT hard to find a reason to justify 3.2 billion, then it’s most likely a bad deal.