SoftBank, Armed With $4.6B Gain from Alibaba Group Eyes DreamWorks Animation (NASDAQ: DWA)

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By Erik Waters on September 29, 2014 Intl News

According to reliable sources SoftBank of Japan is seriously considering acquiring Hollywood’s DreamWorks Animation SKG (NASDAQ:DWA) studio which has to its credit super hit animated movies “Sherk” and “Madagascar”. Chief executive of SoftBank Masayoshi Son, who is its founder as well, has risk taking orientation towards diversifying businesses. Therefore, DreamWorks Animation SKG (NASDAQ:DWA) would become a part of financially strong Japanese Communication and Media Company after its acquisition by SoftBank.

As compared to the Friday’s value of DreamWorks Animation SKG (NASDAQ:DWA) stock closing at $ 22.36, SoftBank is offering a substantially high DreamWorks Animation SKG (NASDAQ:DWA) to $ 3.4 billion as published by Hollywood Reporter quoting an unidentified source. Jeffrey Katzenberg, a veteran Hollywood producer and film executive, is presently heading DreamWorks Animation SKG (NASDAQ:DWA) studio. The stage is all set for SoftBank to own a Hollywood studio thus becoming only the second Japanese technology business to do so after Sony Corp <6758.T> which bought Columbia Pictures 25 years back in 1989.

In 2004, DreamWorks Animation SKG (NASDAQ:DWA) which is based in Glendale (California, USA) broke away from Dreamworks Studios to be listed as a separate company. Steven Spielberg, David Geffen and Katzenberg were the founding members of Dreamworks Studios in 1994. However, Katzenberg moved as chief executive of the animation company, which has also produced animated hit movie “Kung Fu Panda”.

There is a decline of 37 percent in DreamWorks Animation SKG (NASDAQ:DWA) share value this year due to recent flop releases like “Mr. Peabody & Sherman”, losses in the last two quarters and lack of investor confidence on production cost of movies. In addition, DreamWorks Animation SKG (NASDAQ:DWA) is also facing investigation against the write-down it took for its flop animated movie “Turbo” in 2013.

SoftBank has stopped pursing the US mobile carrier T-Mobile <TMUS.N> due to stiff resistance from anti-trust regulators in United States. Moreover, SoftBank has seen a considerable rise in its share of investment in Alibaba Group, a Chinese e-commerce firm. Last week witnessed a gain of $ 4.6 billion for SoftBank on Alibaba Group (NYSE:BABA) share listing in New York thus making it leading shareholder of Alibaba Group with 32 percent stakes. In addition to this, SoftBank also possess considerable stakes in other big listed companies like Sprint a US mobile carrier, Yahoo Japan <4689.T> and online game maker GungHo Online Entertainment <3767.T>.

More than $ 17 billion in cash and equivalents have been held by Softbank as of quarter ending June. SoftBank Internet and Media, a newly formed entity would be run by newly hired Nikesh Arora a former Google (NASDAQ:GOOGL) executive. This move has made speculations even stronger that the telecommunications company is much interested to put its hands on content production assets. Therefore, SoftBank has started aligning itself with Alibaba who is planning to enhance its video content in China introducing a set-top box. Recently, SoftBank has also entered into partnership with Lions Gate Entertainment (NYSE:LGF) for its titles inclusive of “The Hunger Games”.