Hasbro Inc. and DreamWorks Animation SKG Inc. will not be merging. The two companies were in talks about a possible merger, however, because of a price stall and the news affecting Hasbro’s stock price, the merger deal is no longer on the table.
According to deadline, DreamWorks made an asking price of $35 a share, which Hasbro was not too happy with, and the two companies could not overcome the disagreement.
Wall Street was quick to react to the news, with analysts questioning the reasons behind the merger because of the inconsistent performance of DreamWorks.
Since the news was leaked late Wednesday, Hasbro stock has fallen by 6%, while DreamWorks share soared by 16%.
DreamWorks, which is well known for being the studio behind blockbuster hits such as “Shrek” and “Kung Fu Panda” has had a lackluster year. Its shares are down 27% so far as the company has failed to deliver on producing more blockbuster titles.
Shrek won’t be joining forces with Transformers anymore.
In contrast, Hasbro, which creates Transformers and My Little Pony, has performed slightly better, with its stock falling by only 1.8% this year.
Hasbro is keen on turning its franchise properties into feature films. However, “its risk profile would substantially change entering into the volatile movie production business with a company that hasn’t generated positive free cash flow in several years and has had trouble making profitable animated films,” analyst Eric Handler at MKM Partners told MarketWatch.
