Hasbro in Early Talks to Buy DreamWorks Animation
A Deal Would Bring a Diversifying Animation Studio Under the Fold of a Major Toy Maker
A combination of the two companies could accelerate efforts at each to move beyond their core businesses.
DreamWorks Animation has expanded into consumer products in recent years but lags behind Walt Disney Co. , and Hasbro had just changed tack on its entertainment business, selling off some of its stake in the Hub cable network with Discovery Communications Inc.
Hasbro, which has been contemplating such a deal for years, has clout with big retailers that DreamWorks could benefit from, too, one person familiar with the talks said.
News of the possible merger comes about six weeks after reports emerged that the Japanese telecom giant SoftBank Corp. was in talks to acquire the animation studio. However, those talks cooled shortly after reports first surfaced.
Hasbro also recently launched its own film label, Allspark Pictures, with movies based on its toy brands My Little Pony, Jem and the Holograms already in the works.
Hasbro had hoped that Hub could become a force in children’s television that would allow it to feature shows based on its toys, such as G.I. Joe, Transformers and My Little Pony. But it had a hard time edging in on incumbent children’s networks including Viacom Inc. ’s Nickelodeon and Disney Channel.
It is now launching a new series of its “Transformers” cartoon on the Cartoon Network.
DreamWorks Animation spun off from DreamWorks SKG and went public in 2004. Over the past couple of years, Chief Executive Jeffrey Katzenberg has led an effort to diversify his company beyond theatrical releases, including expansions in online video, publishing and television.
Discussions between the two companies are at an early stage. Should a deal be reached, it would likely come in the next two to four weeks, one person familiar with the matter said. DreamWorks is seeking a significant premium to its current share price, this person said, adding that other potential buyers are also hovering around the company.
Last month, DreamWorks reported a third-quarter net income of $11.9 million on revenue of $180.9 million. Its consumer-products division contributed $12.1 million in revenue, up from the $11.8 million in revenue seen in the quarter a year earlier.
The talks were reported earlier by the Hollywood trade website Deadline.
Hasbro and DreamWorks Animation have done business before. Last year the two companies agreed to make toys and games related to two forthcoming DreamWorks releases, “B.O.O.: Bureau of Otherworldly Operations” and “Trolls.”