Source: Darwin Investing Network
DreamWorks Animation’s (DWA) shares are experiencing a 20% increase as of Monday, September 29th, upon the news of a rumored buyout from Japanese telecommunications company SoftBank, CNN reports . While seeing a sudden rise, the reported purchase maybe what the company needs, as their stock has been down 40%.
Box office failures and poor performances in DVD sales have plagued the film animation studio for the last two quarters. This year’s Mr. Peabody and Sherman did not realize DreamWorks’ expectations, joining the ranks of fellow unsuccessful films like Turbo and Rise of the Guardians. Even with the success of How to Train Your Dragon 2, investors are dissatisfied that the sequel has not outperformed 2010’s first installment.
In fact, DreamWorks activity in public trading has been lackluster since its introduction to the market in 2004. While its stock’s height was in early 2010 at $45 (namely due to Dragon’s triumph at the box office), DWA regularly trades at $28, just under its IPO.
The studio’s main adversary, Pixar, has the financial backing of Disney. And the competition has grown over the years: The LEGO Movie by Warner Brothers has performed very well and last year’s Despicable Me 2 by Universal broke the studio’s record for most profitable film.
The idea of a purchase makes sense for DreamWorks, and SoftBank could be just the new home to reinvent the studio. The tech conglomerate is already the owner of 30% of Alibaba, which just took the crown for having the greatest U.S. IPO ever, and is the majority stock holder in Sprint, the American mobile service provider. The company’s net move would be into media.
In terms of pricing, Pixar went to Disney for $7.4 billion, but with a market value of $1.9 billion, reports are estimating at around a $3.4 billion offer.