Dreamworks Animation Skg Inc Jumps On Hasbro Buyout Report

The toy-maker of such hits as Transformers, Hasbro, Inc. (NASDAQ:HAS) has seen a bit of a revival over the past five to six years, as the Transformer movies bring in nice royalty checks and toy sales begin to bottom out.  Today, however, news broke that Hasbro had approached Dreamworks Animation Skg Inc (NASDAQ:DWA) on a possible acquisition deal.  Neither company has commented on the potential deal yet, as both sides continue to negotiate and attempt to reach a deal and valuation for Dreamworks.  The only real information we have right now on the potential valuation the deal would give Dreamworks is the fact that Dreamworks CEO, Jeffrey Katzenberg, is looking for the deal to value the animation movie maker over $30 a share.

Dreamworks’ acquisition dance

Dreamworks Animation Skg Inc (NASDAQ:DWA) has been doing to acquisition dance for weeks now.  Just a few weeks ago, Japanese bank, Softbank Corp (TYO:9984) (OTCMKTS:SFTBF) joined Dreamworks in negotiations to potentially acquire the company.  However, the talks fell apart and there was no real indication of why or reasoning behind closing up acquisition talk.

Notes From Schwarzman, Sternlicht, Robert Smith, Mary Callahan Erdoes, Joseph Tsai And Much More From The 2020 Delivering Alpha Conference

Stephen SchwarzmanThe following are rough notes of Stephen Schwarzman, Steve Mnuchin, and Barry Sternlicht's interview from our coverage of the 2020 CNBC Institutional Investor Delivering Alpha Conference. We are posting much more over the next few hours stay tuned. Q2 2020 hedge fund letters, conferences and more One of the most influential investor conferences every year, Read More

Dreamworks has an impressive history of massive hits such as “Shrek”, “How to Train Your Dragon”, “Madagascar” series, and more.  Shrek 2 remains the highest grossing movie for Dreamworks at $441.23 million when the movie came out back in 2004.  While the company has had some success at the box office, they have delivered a few rotten eggs too, such as Sinbad: Legend of the Seven Seas, which grossed only $26 million.  Additionally, the company’s recent flops in Turbo and Mr. Peabody & Sherman have also frustrated shareholders. DVD sales continue to fall, which also has been applying additional pressure to earnings and management. Needless to say, Dreamworks has struggled in 2014, and certainly looks to try an recapture its mojo from the early 2000s.  Year to date, Dreamworks has fallen 37%, but shares are up over 16% today on the news of a potential acquisition.

Why is Hasbro interested in Dreamworks?

It is certainly interesting that Hasbro, a toymaker, is interested in an animation studio such as Dreamworks Animation Skg Inc (NASDAQ:DWA).  Hasbro has been having a better year than Dreamworks, but the company continues to try to get growth sparked and expanding.  Hasbro, Inc. (NASDAQ:HAS)’s sales, quarter over quarter, are up 7.30% and earnings per share are up 44.30% during the same period, which is certainly not bad.  However, could Hasbro be attempting to make a go at producing its own animation films?  As the toy industry continues to lose its shine from the rise of other entertainment systems, Hasbro appears to be making a move to diversify and expand its business into new segments.  If the deal is approved and goes through, Hasbro could capitalize on a new market and potentially getting the growth machine back in serve and humming once again.  Transformer animation movies, anyone?

Disclosure: None