American multinational toy and board game company Hasbro Inc, which is also one of the largest toy makers in the world, is in early talks to buy the Hollywood production studio DreamWorks Animation SKG Inc.
DreamWorks’ shares closed up 14% at $25.52 on Thursday. Hasbro’s stock, meanwhile, closed down 4.3% as investors worried over the impact of a deal on the company’s partnership with Disney.
DreamWorks Chief Executive Jeffrey Katzenberg is seeking more than $30 per share, according to the New York Times, which first reported the talks. The offer values DreamWorks at $2.56bn.
Hasbro, the second largest US toymaker, is seeing a strong demand in emerging markets for Marvel action figures such as Spider-Man and Iron Man, which the company has licensed from Walt Disney & Co. But the partnership with Disney could be at risk if the deal goes through, as DreamWorks competes directly with the company, according to Piper Jaffray analyst Stephanie Wissink.
Toys based on Disney’s characters account for 25%-30% of Hasbro’s annual revenue and $200m-$250m of annual profits, analysts estimated. However, other analysts have pointed out that Hasbro could benefit from DreamWorks’ rich collection of animation characters, such as Shrek and Kung Fu Panda.
DreamWorks spokesman Matthew Lifson and Hasbro spokeswoman Julie Duffy said in separate statements that the companies do not comment on rumours and speculation.
Analysts are mixed about the merits of a deal, and many are weary of talk about DreamWorks Animation after its negotiations with Japan’s Softbank appeared to fizzle.