MOSCOW, November 13 (Sputnik) — Hasbro is preparing an offer to buy Dreamworks Animation, reports Deadline.com, in a deal which follows recent bids from both companies to diversify their activities.
The entertainment industry website said the two companies were “deeply engaged” in negotiations, but that both parties declined to comment on the deal, citing corporate policy and their publicly traded status.
However, sources told the New York Times on Wednesday that talks are at an advanced stage, and that Jeffrey Katzenberg, CEO of DreamWorks Animation, is expected to stay with the company. Deadline expects Katzenberg to head up the merged firm.
According to Deadline, Katzenberg is asking for $35 a share from Hasbro in a deal for which the Times reports the toy maker would pay with a mix of cash and stock. On Wednesday shares in DreamWorks Animation closed at $22.37, giving them a total market value of $1.9 bln. Shares in Hasbro closed at $56.67, giving the company a total market value of $7.3 bln.
DreamWorks Animation was originally part of Dreamworks Studios, the motion picture company founded in 1994 by Steven Spielberg, David Geffen and Katzenberg. In 2004 the animation arm was spun off into its current publicly-traded form, shares of which have endured fluctuating fortunes on the market.
After a 2004 IPO pricing of $28 per share, the price rose to an all-time high of $44 in March 2010. In February 2013 share prices dropped to an all-time low of $16.16. This reflected the announcement of the box office failure of Rise of the Dragons, the disclosure of an $83 mln loss in the last quarter of 2012 and 350 layoffs.
Such tribulations lead the animation firm, well-known for a series of box-office successes like Shrek, Madagascar, and Kung Fu Panda, in the direction of diversification, and the current industry rumors are not the first concerning possible investments in the company. In September Bloomberg reported that Japanese telecommunications firm SoftBank had offered $32 per DWA share, before talks cooled without a deal.
Other efforts at diversification by DWA to date include moves into television and online video. One of these, Awesomeness TV, is a Youtube teen network which it acquired in May 2013. In Wednesday’s report, Deadline says the studio is also looking to reach a deal with Hearst Corporation to invest in the project.
Toy giant Hasbro itself in recent years has made efforts to expand its entertainment portfolio, which includes the successful Transformers franchise and an alliance with the Discovery Channel to create a children’s TV channel. In September Hasbro announced it was decreasing its 50% stake in the project to 40%, after it failed to make headway against Nickelodeon and the Disney Channel.
