Analyst says Kung Fu Panda maker DreamWorks is worth far less than Marvel
Finance | 29 Apr 2016 11:52 am
Comcast is buying DreamWorks Animation, the film company behind the “Shrek,'' “Madagascar'' and “Kung Fu Panda'' franchises, for about US$3.55 billion, strengthening its presence in the important and growing business of children's entertainment.
DreamWorks stockholders will receive US$41 for each share they own. That is a 24 percent premium to the company's Wednesday closing price of US$32.20. The companies put the deal's value at about US$3.8 billion.
DreamWorks will become part of the Universal Filmed Entertainment Group, which includes Universal Pictures. The studio has churned out hit animated movies through its Illumination label, including the “Minions'' sequel and it has some Dr. Seuss projects in the works such as “How the Grinch Stole Christmas.''
The largest cable company in the US said the deal gives NBCUniversal, a unit of Comcast Corp., a “broader reach to a host of new audiences in the highly competitive kids and family entertainment space, in both TV and film.'' In addition to the cartoon franchises, DreamWorks also owns what Comcast called a “thriving TV operation'' with its AwesomenessTV network of online video creators and a lengthy contract to create shows for Netflix.
The deal solves what Cowen and Co. analyst Doug Creutz “would have been a very difficult succession plan had DWA remained independent, as to a certain extent we think the company had been held together purely through (CEO Jeffrey) Katzenberg's force of will.'' (Pictured, Jeffrey Katzenberg).
The analyst said that while he is “skeptical about the strategic logic'' for Comcast in inking the deal, it is an excellent one for DreamWorks.
“Despite some positive recent developments with TV production and the Awesomeness asset, DWA remains a company that has not generated significant earnings since 2010,'' Creutz wrote. “We think DWA is worth far less than either Marvel or Lucasfilm, for which Disney paid comparable prices when they acquired those companies.''
Shares of DreamWorks Animation SKG Inc. leapt by US$7.76, or 24 percent, to US$39.97 while Comcast added 9 US cents to US$61.39 in afternoon trading.—AP
