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Paul Allen, whose $500 million investment a dozen years ago was instrumental in the founding of DreamWorks SKG, said Monday that he will sell off a significant portion of his investment in the company’s animation studio spinoff and resign his board seat.
The multibillionaire co-founder of Microsoft will sell $150 million worth of DreamWorks Animation stock back to the company, and he will sell an additional 10 million shares to the public in a secondary offering underwritten by Goldman Sachs and Bear Stearns.
The sales will leave Allen with 6 million-7 million shares of DWA, or about 7% of the company, below the threshold needed for him to retain a seat on the board of directors, a spokesman said, citing an agreement struck when DWA went public three years ago.
Allen’s resignation will leave DWA with 10 board members, and the company hasn’t decided whether it will soon add to it, head of investor relations Rich Sullivan said.
The initial public offering of DWA was in part designed as a way for Allen to cash out some of his investment in DreamWorks SKG, as was the sale of the live-action studio to Paramount Pictures.
Allen, along with DreamWorks founders Steven Spielberg, Jeffrey Katzenberg and David Geffen, sold a combined 4 million DWA shares at its October 2004 IPO for $28 apiece.
The IPO, timed to take advantage of the boxoffice success of “Shark Tale,” was roundly received on Wall Street, with investors bidding shares 38% higher to $38.75 on the first of trading.
On Monday, DWA shares closed fractionally higher at $32.97 but slid 3% in after-hours trading, when the secondary offering was announced.
Allen has been slowly divesting of his DreamWorks investment — which eventually swelled to a reported $700 million — for several years now. He sold 12 million shares in November, and the $1.6 billion purchase of DreamWorks by Paramount Pictures in December 2005 also was a significant liquidity event for Allen. That acquisition, insiders said, turned Allen’s investment into a profitable one.
“Since DreamWorks Animation went public, he has had rights to sell, and he’s doing so in an orderly fashion,” Sullivan said. “And he remains one of our largest shareholders.”
Allen said he will make his DWA stock sales through DW Investment II, an entity controlled by him and his Vulcan Capital.
Vulcan’s other investments include Charter Communications, television technology company Digeo, the NBA’s Portland Trail Blazers, the NFL’s Seattle Seahawks and cable television channel Oxygen.
Katzenberg, DWA’s CEO, said Allen will remain an adviser to the company.
“The reduction in our position in DreamWorks Animation is part of an ongoing effort to rebalance the Vulcan Capital portfolio,” Allen said. “I am pleased to have been a principal investor in DreamWorks since its inception and proud of the company’s many successes.”
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