There is a 40% chance Apple will acquire Netflix, according to Citi (AAPL, NFLX)

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Citi analysts say that there is a 40% likelihood of Apple acquiring Netflix.
Apple will be able to repatriate about $220 billion in cash to the US under the Trump tax cut.
The company would need only one-third of that to snap up Netflix.

There is a 40% likelihood that Apple will acquire Netflix now that US President Trump's corporate tax cut has been passed, according to Citi analysts Jim Suva and Asiya Merchant.

The cut in corporate taxes, along with a one-time allowance for companies to repatriate cash stored overseas without a major tax hit, will give Apple a much larger cash warchest to buy new companies. Apple has about $252 billion in cash, much of it in foreign jurisdictions, which previously it was unable to bring back to the US.

Suva and Merchant ranked potential Apple M&A targets in a note to clients sent in December. They mark Netflix as the company Apple would be most likely to buy:

Citi Apple acquisition targets

The note was written before Disney's acquisition of Fox's studio and TV assets. But prior to that event, Citi gave an Apple-Disney tie-up a 20-30% chance.

Apple has for years struggled to offer a compelling TV or movie offering. iTunes has been a huge hit for the company, but viewers have migrated increasingly to services like Netflix, Amazon or Hulu to watch their favourite shows.

Apple has recently dipped a toe into content creation: Jennifer Aniston and Reese Witherspoon will be in Apple's first scripted video series. But making hit movies is a very different skill-set from making the iPhones they are viewed on, so there is some logic to the idea that Apple might want to own Netflix in the future.

"The firm has too much cash – nearly $250 billion – growing at $50 billion a year. This is a good problem to have," Suva and Merchant told clients. "Historically, Apple has avoided repatriating cash to the US to avoid high taxation. As such, tax reform may allow Apple to put this cash to use. With over 90% of its cash sitting overseas, a one-time 10% repatriation tax would give Apple $220 billion for M&A or buybacks."

Apple would need only a third of that cash to buy Netflix, the pair say.

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