Transformers and My Little Pony toymaker Hasbro is in talks to acquire DreamWorks Animation SKG, the production studio behind "Shrek" and "Madagascar," according to people briefed on the matter.
DreamWorks Animation, led by Jeffrey Katzenberg, is asking for more than $30 a share, according to one of the people, who asked not to be identified because the talks are private. The discussions are preliminary, the people said. The stock jumped as much as 29% to $28.87 before the markets opened.
The studio, with a market value of about $1.9 billion, would further Hasbro's involvement in entertainment -- something the toymaker pursued with its stake in TV's Hub cable channel, only to find tough going in a competitive space. Hasbro reduced its share of the network to 40% from 50% as it was renamed Discovery Family Channel this fall and broadened its programming mission beyond kids.
Hasbro also has lent its products to films including "Transformers: Age of Extinction," the top-grossing film worldwide this year.
A price above $30 a share would represent at least a 34% premium to yesterday's closing price of DreamWorks Animation. The company has been diversifying into TV, online video and theme parks to reduce its dependence on the hit-or-miss film business.
DreamWorks Animation, based in Glendale, California, had dropped 37 percent this year through yesterday. Hasbro gained 4.5 percent in the period, giving it a market value of $7.22 billion.
The talks were reported earlier by Deadline.com, which said Mr. Katzenberg would become chairman of the combined operation.
DreamWorks Animation has also held talks with Hearst Corp. to jointly own Awesomeness TV, the online video business the studio acquired last year, the people said. Those talks were reported by Deadline too.
Mr. Katzenberg had talks with Softbank Corp., the Japanese telecommunications company headed by Masayoshi Son, people with knowledge of the situation said in late September. The talks with Softbank have ended, one of the people said yesterday.
Julie Duffy, a spokeswoman for Pawtucket, Rhode Island- based Hasbro, declined to comment, citing company policy, as did Matt Lifson, a spokesman for DreamWorks Animation. Paul Luthringer, a spokesman for New York-based Hearst, didn't respond to a request for comment after normal business hours.
"Transformers: Age of Extinction" is the fourth Paramount Pictures film based on the Hasbro toys. It has generated $1.09 billion at the global box office. The company makes the board game that was turned into "Ouija," a Universal Pictures film that opened this month.
Paramount, part of Viacom,. has released two films based on the company's G.I. Joe toys that have taken in more than $678 million at the global box office, according to Box Office Mojo.
DreamWorks Animation, which has previously looked for a buyer, expanded its TV business and acquired Awesomeness TV, an online video network, while forming a partnership in China that includes live entertainment. Those efforts haven't grown enough to offset film write-offs that hurt the stock.
~ Bloomberg News ~