Softbank Corp. and DreamWorks Animation SKG are talking about an acquisition deal said to be worth about $3.4 billion. Softbank, a major Alibaba shareholder, is cash-rich after the Chinese e-commerce giant’s IPO on the New York Stock Exchange earlier this month.
DreamWorks was behind the “Kung Fu Panda”, “Madagascar” and “Shrek” movies.
SoftBank, which still has a 32% stake in Alibaba, posted a $4.6 billion increase on the share listing of Alibaba Group in New York.
According to the Hollywood Reporter, which quoted an unnamed person said to be familiar with the matter, the acquisition would value DreamWorks at approximately $3.4 billion.
SoftBank is believed to have offered DreamWorks $32 per share, which is a considerable premium over Friday’s $22.36 closing price.
DreamWorks is a Hollywood studio and leading animation company.
If the acquisition goes through, it will be the second takeover of a Hollywood studio by a Japanese company. In 1989, Sony Corp. purchased Columbia Pictures.
SoftBank had been interested in buying mobile-carrier T-Mobile US through Sprint, but walked away from further talks after US anti-trust regulators’ opposition.
DreamWorks’ bad two years
DreamWorks has been trying to diversify after a series of box-office flops over the last 24 months that spooked investors and sent the company’s share price tumbling.
The studio took a $57 million write-down for “Mr. Peabody & Sherman”, the third write-down in under two years. It also took a write-down this year on “Turbo”. In 2013, there was an $87 million write-down on “Rise of the Guardians”, which triggered a workforce reduction of 350 employees.
Its latest movie, “How to Train Your Dragon 2”, however, has done well, especially in China.
DreamWorks Animation started in 1994 as an attempt by Steven Spielberg, Jeffrey Katzenberg (current CEO) and David Geffen to create a Hollywood studio. It grew into a $700-million-per-year multimedia giant and a leading animation company. In the second quarter, the firm posted a $15.4 million loss.
Nikesh Arora, a business development expert who worked at Google for ten years, has recently joined Softbank. He must be interested in adding DreamWorks content to the company’s streaming videos.
Video – What is takeover?
A takeover is an acquisition, however, it is not a merger.