Dream Works Animation SKG Inc. (NASDAQ:DWA) Planning To Accept The Hasbro Offer?

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By Thomas Copeland on November 14, 2014 Company

News has it that Dream Works Animation SKG Inc. (NASDAQ:DWA) will be bought by Hasbro Inc. (NASDAQ: HAS). According to the news, Hasbro will pay stock and cash for the buyout. The final deal price is unknown as of yet.

This is not the first time that news regarding the supposed sale of DreamWorks has hit the market. An offer was made to the company by SoftBank, a Japanese telecommunication company, in September 2014 as well; however, the negotiations did not go through.

The offer made by SoftBank was for $32 for each share, meaning that the total price would have been around $3.4 billion for the company. This offer was made after the company’s revenues dropped by 37 percent on yearly basis due to its underperformance in 2 consecutive quarters. It is pertinent to note here that the offer made by Softbank was at a 39 percent premium. Market researchers are of the view that the deal with Softbank fell because the chief executive officer of Dream Works, Jeffrey Katzenberg, wanted at least $30 per share in that deal. This speculation of market researchers might be true, considering the fact that SoftBank was previously planning on offering a price falling in that very range.

The deal between Dream Works Animation SKG Inc. (NASDAQ:DWA) and Hasbro Inc. (NASDAQ: HAS) has not been sealed yet, as no company has made any comments denying or confirming the deal. Since there has not been a denial or confirmation, the news is being treated as a rumor.

The first news source to comment on the merger talk was Deadline.com, the news website for Hollywood. According to Deadline.com, Dream Works Animation SKG Inc. (NASDAQ:DWA) is currently in the middle of two negotiations that can result in a complete turn over situation, transforming and changing the company forever. The company may strike a deal with Hasbro Inc. (NASDAQ: HAS), resulting in the formation of Hasbro-Dream Works. Or the company can also turn the awesomeness of DWA TV into a combined venture. The website further posted that the deal will not be sealed for a further period of 2 months, for both the companies have to do a lot of documentations. If both the companies decide to start a joint venture, the CEO of Dream Works Animation SKG Inc. (NASDAQ:DWA), Jeffrey Katzenberg, will be the head of operations.

As soon as the news hit the market, the shares of Dream Works Animation SKG Inc. (NASDAQ:DWA) spiked up by 17 percent and reached to $26.18 within the first 2 hours of trade. The consensus price target on DWA’s stocks was reported to be around $21.50, but the price of the shares surpassed that range. DWA has a market capitalization of $2 billion with a 52 week price range of $19.20 – $36.01.

Where the shares of Dream Works Animation SKG Inc. (NASDAQ:DWA) saw an increase, the stocks of Hasbro, on the other hand, fell by 5 percent and came down to $54.52. The consensus price target on Hasbro’s stocks is $62, which seems quite far right now.