Why Apple shareholders may be laughing all the way to the bank
Apple is seeking funds for another round of rewarding its shareholder without using cash from overseas that would be subjected to repatriation taxes. The technology company that is ranked as the most valuable has hired the service of Deutche Bank AG and Goldman Sachs Group Inc, to manage the sale. The money will be used to buyback shares and give dividends.
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The California-based company is borrowing in Euros in a bid to take advantage of the lowest yields in 6 years. Since the year 2011, Apple has been able to raise $29 billion bonds which has been given back to its owner rather than repatriating it overseas.
Data from Bloomberg indicates that Apple holds 88% of its cash overseas and there are suggestions that the company is being pushed by its activist investor to increase its stock repurchase program. In April, it sold bonds worth 12 billion dollars after issuing 17 billion dollars in 2013 in what was considered to be the biggest corporate bond sale then.
The technology company forecasts record sales during the holiday after it introduced a slimmer iPad and an iPhone with a bigger screen. Out of the amount of $1.65 trillion that is been held by non- financial institutions in the U.S, Apple’s amount account for 10%. If the company brings the money back to the U.S, they will be taxed at the corporate rate of 35% but they will be given credits for any foreign income tax that they have paid. Companies that pay little in overseas levies are charged higher US tax bills when they repatriate and they can make savings if they decide to borrow instead.
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Source: Apple Balla