NEW YORK (TheStreet) - DreamWorks Animation (DWA) shares surged on Monday following reports over the weekend that the movie studio, known for hit film franchises such as Shrek, Kung Fu Panda, and Madagascar could be acquired by Japanese conglomerate SoftBank (SFTBF) .
A deal, which has not been formally announced as of press time, could potentially value DreamWorks, founded and run by Jeffery Katzenberg, at $3.4 billion, according to The Hollywood Reporter. SoftBank is reportedly offering DreamWorks $32 a share, the article stated. DreamWorks stock closed on Friday at $22.36. Shares were surging 17.3% to $26.23 on Monday.
Watch the video below for more on SoftBank's potential acquisition of DreamWorks:
Analysts had mixed perspectives on the possibility of SoftBank acquiring DreamWorks. Here's what they had to say:
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Jessica Reif Cohen, Bank of America Merrill Lynch (DreamWorks Moved to No Rating)
Over the years, several Hollywood studios-even foreign investors from markets such as China where DWA is well positioned for substantial long-term growth-have long been mentioned in press speculation as the ultimate acquirers of the smid-cap animation studio. Thus, a possible Softbank acquisition is somewhat surprising, particularly for a company that has struggled to monetize its films in the Japanese market. However, we believe a potential deal could yield benefits, as DWA could enjoy greater access to capital for growth initiatives and could better align itself with Softbank's portfolio companies in the telecom, gaming and on-line spaces (where growth opportunities for content owners often reside). The press reports suggest that DWA founder and CEO Jeffrey Katzenberg would sign a 5-year contract to remain with the company post-acquisition.
While the outcome of any potential Softbank/DWA talks remains to be seen, we view the reports favorably, as in our view a transaction would mark yet another milestone for the rising values of Hollywood content in an environment where there are more ways to monetize than ever before. Additionally, other potential bids could emerge. Although we had viewed DWA's fundamentals as relatively challenged given recent box office trends and generally low visibility on successful franchise replenishment efforts, DWA shares are no longer trading on fundamentals, in our view, and we are moving to No Rating. Investors should no longer rely on our previous fundamental equity opinion or price objective.
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