DreamWorks Animation in Talks to Merge With Hasbro

Jeffrey Katzenberg
Paul Jeffers

"Australia's always been very family-friendly. We've had immense success here," DreamWorks Animation CEO Jeffrey Katzenberg said of the studio's decision to open "Dreamworks Animation: The Exhibition" at Melbourne's Australian Centre for the Moving Image, which opened April 9. The exhibition features more than 400 items from the studio's history.

Additionally, DWA is negotiating with Hearst to turn AwesomenessTV into a joint venture

A month after SoftBank ended talks to acquire DreamWorks Animation (DWA), the studio run by CEO Jeffrey Katzenberg is in early negotiations to merge with toymaker Hasbro, people familiar with the talks said Wednesday.

Additionally, DWA is negotiating with Hearst to turn AwesomenessTV into a joint venture. DWA purchased the digital entertainment company 19 months ago.

Insiders say that Hasbro, a company headquartered in Rhode Island that employs 5,500 people, could pay about $35 a share for DWA, nearly a 57 percent premium compared to where the stock closed on Wednesday.

At the close of trading Wednesday, DWA sported a market capitalization of $1.9 billion, while Hasbro was at $7.2 billion.

Hasbro, the nation's second-largest toymaker after Mattel, is coming off a strong quarter in which revenue rose 7 percent to $1.5 billion. DWA, where financial results are traditionally lumpy due to the nature of film business, also reported a good quarter, with revenue of $181 million, $4 million better than analysts had predicted.

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Both Hasbro and DWA have been seeking ways to diversify their businesses. A merger with Hasbro would not only significantly boost DWA's presence in consumer products, but also live-action films and television.

On Wednesday, in fact, Hasbro, appointed a new chief content officer, Stephen Davis, who will oversee Hasbro Studios in Los Angeles and the company's partial interest in the Discovery Family TV channel.

Davis will also help oversee Allspark Pictures, which is producing a feature film called Jem and the Holograms as well as an animated movie based on Hasbro's My Little Pony toy franchise.

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When announcing its earnings, Hasbro gave much of the credit for its growth to toys that are associated with movie franchises, including superheroes from Marvel, owned, ironically, by Disney, a chief rival of DWA.

Hasbro also controls the Transformers and G.I. Joe toys, which have been made into Paramount movies, and it has the card game Magic: The Gathering, which is planned as a Fox movie as well as the children's board game, Candy Land, planned for a movie with Sony.

Hasbro and Hearst did not respond to a request for comment, DWA declined to comment.

Email: Paul.Bond@THR.com