Ever since tax cuts gave U.S. companies a bunch of extra cash to play with, they’ve been throwing all that extra cash at two things: buybacks and acquisitions. In the first half of 2018, buybacks were up more than 80% year over year, while M&A activity in the U.S. surged 130% higher, according to UBS.

Naturally, that cash-heavy, big-M&A backdrop lends itself to a bunch of M&A rumors. Some of them turn out to be true. Others turn out to be absolute nonsense. E-commerce giant Amazon (NASDAQ:AMZN) has been at the heart of many of these rumors, given the company’s persistent quest to dominate multiple different markets. One of the market’s Amazon wants to dominate, but has been struggling in recently, is streaming. As such, one Amazon M&A rumor that has been getting a lot attention from the market is the idea that the company might buy content platform Lions Gate (NYSE:LGF).

These rumors have been around for a while. Lionsgate has seemingly been up for sale over the past several quarters, as the company has struggled to compete with streaming giants like Amazon and Netflix (NASDAQ:NFLX). During that stretch, Amazon’s name has been thrown into the ring multiple times for two big reasons. One, Amazon is teaming up with Lionsgate to launch Starz internationally on Prime Video. Two, Amazon has fallen way behind Netflix in the streaming wars, and needs all the help (content?) it can get.

Although LGF stock is down 30% year to date and clearly not priced for any M&A catalyst, major Lionsgate shareholder John Kornitzer implied in a recent interview that Amazon could indeed swoop in and buy Lionsgate if the Starz rollout goes successfully. LGF stock popped on the news.

LGF stock could go a lot higher if these murmurs turn out to be true and, at this point in time, a potential acquisition looks quite likely. As such, I think the smart move here is to own both AMZN and LGF stock.

Why Amazon Will Make a Content Related Acquisition

If anything is clear from Amazon’s twenty-plus year history, it is this: the company doesn’t just participate in markets, it tries to dominate markets. Amazon didn’t just create an e-commerce business. It dominated the e-commerce market. Amazon didn’t just create a cloud business. It dominated the cloud market. Amazon didn’t just create smart home products. It dominated the smart home market.

From this perspective, if Amazon currently has a business which isn’t the dominating player in that market, chances are high that Amazon will make aggressive moves to turn that participating business into a dominating business.

One such business for Amazon is Prime Video. Prime Video is a subset of Amazon Prime, which has more than 100 million subscribers. But, those 100 million subscribers are using Amazon Prime mostly for the shopping perks, not Prime Video. About 26 million Prime subscribers stream content through Prime Video in the U.S. That is a healthy number. But it pales in comparison to Netflix’s 57 million U.S. subscriber base.

In other words, Netflix is dominating the streaming industry, not Amazon. Amazon doesn’t take kindly to playing second fiddle — and will do everything possible to not be second fiddle.

How does Amazon do that? Original content. Netflix differentiated itself from the streaming pack through original content. Ever since the company started pouring billions of dollars into original content development and acquisitions, subscriber numbers have boomed and Netflix hasn’t looked back.

Amazon is starting to do the same and while the results are good (Amazon had five Emmy wins this year), they aren’t good enough (Netflix had 23 Emmy wins). Thus, Amazon is going to need some outside help in order to compete with Netflix. This is especially true considering the streaming landscape is only getting more crowded and that one of the new major entrants, Disney (NYSE:DIS), just super-charged its content portfolio by acquiring content assets from Twenty-First Century Fox (NASDAQ:FOX).

All together, Amazon needs more content firepower if it hopes to dominate the streaming industry. Given Amazon’s track record, it is very likely this company hopes to dominate streaming. Thus, it also very likely that Amazon makes a content-related acquisition, and does so soon.

Why Lionsgate Could Be the Answer

The Amazon-Lionsgate acquisition rumors make sense for one simple reason. Amazon needs content firepower; Lionsgate has content firepower.

Lionsgate essentially comprises two major content assets: big-screen movies and premium original programming. On the big-screen movies front, Lionsgate holds its own against other large studios. The studio’s biggest hit, the Hunger Games series, was a big box office success and has a huge a following. Other Lionsgate big-screen productions, like La La Land, Wonder, the Now You See Me series, the Divergent series, the John Wick series, and a host of Tyler Perry movies, also had strong box office showings and comprise what is a fairly valuable big-screen content portfolio for the company.

On the premium original programming side, Lionsgate is behind Starz, which is one the more successful premium cable networks in the world. Also, the company produces a number of other widely watched TV shows, like Orange Is The New Black and Mad Men.

Overall, the Lionsgate content portfolio is exactly what Amazon needs to give Prime Video that extra content boost to compete with Netflix and Disney. Thus, I think it is pretty likely that, assuming a successful international rollout of Starz on Prime Video, Amazon pulls the trigger and buys Lionsgate.

Bottom Line AMZN and LGF Stock

I’d own both AMZN and LGF stock here. AMZN stock has huge multi-year upside because of its tremendous growth potential in multiple high-growth arenas — streaming being on those arenas.

LGF stock, meanwhile, could trend markedly higher in the near-term as M&A rumors start to gain mainstream market credibility. If Amazon does end up pulling the trigger, this stock could explode higher.

As of this writing, Luke Lango was long AMZN, LGF, NFLX, and DIS.