Why Apple Acquiring Tesla Makes Sense
Jul. 3, 2014 9:19 AM ET | 30 comments | About: Apple Inc. (AAPL), Includes: TSLA
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...)
Summary
•Why Apple rumor is bad news for Tesla investors, it possibly isn’t what you think, saturation doesn't mean Apple will acquire Tesla.
•The question can be settled once and for all: regardless of Apple's appetite, Tesla is not looking for a buyer and would be unlikely to agree to be purchased.
•Could Apple be Looking to buy a piece of the 'Gigafactory' or 'Tesla’s touch screen' a possible point of collaboration with Apple?.
•For a buyer Tesla as well as Apple, both stocks look strong at current levels, I do not see a merger in near future.
Talks of Apple (AAPL) Buying Tesla (TSLA)
It's been a while since the idea of Apple's intention to purchase Tesla Motors started circulating in the corporate world. The rumor sprang out of the supposed "secret" meeting between Tesla's CEO, Elon Musk, and Apple's head of mergers and acquisition, Adrian Perica, last spring. It must have gained strength from Adnaan Ahmad's open letter to Perica and Apple's CEO, Tim Cook, in which he suggested that Apple Inc. should try to buy Tesla Motors. However, talks between two major tech companies do not necessarily mean that one is looking to buy the other - there are a lot of other, more likely possibilities. Many investors have started bidding up Tesla because of the Apple acquisition rumors; however. Acquisition rumors can boost the share price of any company; however, when the speculation fails to materialize, the stock starts falling at a rapid pace. For instance, back in 2010, reports suggested that Apple was interested in buying Nuance Communications (NUAN), which resulted in an over 85% increase in Nuance's share price.
Tesla Borrowing Apple's Technology? Tesla's touch screen: a possible point of collaboration with Apple?
In an interview with Bloomberg, Tesla's CEO, Elon Musk confirmed that he was in talks with Apple but refused to comment on a possible partnership or merger - with "one or more companies" that might have approached Tesla. He did, however, state that it was "very unlikely" that he would sell Tesla to any company. Then what exactly were the talks between him and Apple's Adrian Perica about?
Musk refused to spill the beans on that, too, but it is a possibility that Tesla might look to incorporate iOS into his cars in the future, relating in the interview that Android was rejected earlier on by the company because it wasn't ready to be used inside a car. That could possibly mean that he is considering Apple's iOS to play that role. A "Tesla iCar" would undoubtedly be the hottest vehicle to hit the market, possibly ever. With that in mind, Apple protects its intellectual property fiercely, Lewis also mentions some of the opportunities Apple and Cook have missed, specifically the acquisition of Nest by Google (GOOG) (GOOGL) earlier this year. Apple is sitting on over $150 billion in cash, and many investors, Icahn most vocally, want to see it spend some and find the next hot thing like the "Tesla iCar."