NEW YORK (TheStreet) -- Shares of DreamWorks Animation SKG (DWA) are surging, up 25.61% to $28.10 in pre-market trade, after it was reported that Hasbro (HAS) is in talks to acquire the film studio, potentially marking a big step into entertainment by the toy maker, sources told Bloomberg.
DreamWorks, led by Jeffrey Katzenberg, is asking for more than $30 a share, sources said, adding that the discussions are preliminary.
Dreamworks Animation, with a market value of about $1.9 billion, would deepen Hasbro's involvement in film and TV. The toy maker has a 40% stake in the Discovery Family Channel, previously called the Hub. Hasbro also has lent its products to films including "Transformers: Age of Extinction" the top-grossing film worldwide this year, Bloomberg noted.
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DreamWorks has been diversifying into television, online video and theme parks to reduce its dependence on the hit-or-miss film business.
TheStreet Ratings team rates DREAMWORKS ANIMATION INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate DREAMWORKS ANIMATION INC (DWA) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including weak operating cash flow and a generally disappointing performance in the stock itself."