DreamWorks Animation, Hasbro Merger Talks End

Wall Street analysts thought the toy giant overvalued the animation studio at $35 a share

DreamWorks Animation CEO Jeffrey Katzenberg

Hasbro is no longer talking merger with DreamWorks Animation, an individual with knowledge of the situation told TheWrap.

News of the early stage talks first surfaced on Wednesday and received an unfavorable reaction from Wall Street. Shares of DWA stock shot up 14 percent to $25.50 a share, but still not near what Hasbro was reportedly willing to pay at $35 a share. Shares of Hasbro dropped four percent on Thursday and another two percent on Friday, indicating Wall Street was not on board with the deal.

Many analysts questioned the reported valuation of the company. DWA’s previous talks with Softbank valued the company at $32 a share and the company is currently trading near $26 a share.

“We don’t see a plausible argument for why [Hasbro] would pay 41 percent of its current market capitalization for a company which, according to its CEO is facing serious challenges,” analyst Vasily Karasyov wrote in a note on Thursday. “Films profitability continues to decline and the ramp in consumer product revenue the bulls hoped for isn’t coming: the revenue stream is down 21 percent so far in 2014.”

A spokesperson for DreamWorks Animation has decline to comment to TheWrap.

Deadline first reported the potential merger.

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