Comcast to Buy DreamWorks for $3.8 Billion
DreamWorks shareholders to get $41 in cash for each share they own
"Penguins of Madagascar," a spinoff of DreamWorks Animation's successful "Madagascar" franchise, was released in November of 2014. PHOTO: 20TH CENTURY FOX
Comcast Corp. on Thursday said it agreed to buy DreamWorks Animation SKG Inc. for about $3.8 billion, a deal that could make the cable giant a rival to Walt Disney Co. in the lucrative family-entertainment business.
In the transaction, expected to close by the end of the year, DreamWorks Animation stockholders will receive $41 in cash for each DreamWorks share.
The purchase price is a premium of 27% over DreamWorks’ close on Wednesday and a premium of 51% over its closing price on Tuesday, before The Wall Street Journal reported the companies were in merger talks.
DreamWorks Animation co-founder Chief Executive Jeffrey Katzenberg will become chairman of DreamWorks New Media, which will be comprised of the company’s ownership interests in Awesomeness TV and NOVA.
Mr. Katzenberg has been seeking a buyer for his studio, one of the last in Hollywood not part of a larger conglomerate, for several years.
“NBCUniversal is the perfect home for our company,” said Mr. Katzenberg.
The deal includes a $200 million reverse breakup fee related to antitrust approval, according to a Comcast filing.
Comcast’s Universal Pictures studio has enjoyed success in recent years with its animated “Despicable Me” and “Minions” movies but is still a relatively small player.
Its parent company, though, has been moving aggressively to mimic Disney by using its animation properties to build out its consumer products and theme parks businesses, a strategy that could be accelerated by the addition of DreamWorks, which makes the “Shrek,” “Kung Fu Panda,” and “Madagascar” movies, among others.
Shares of Comcast fell 0.8% to $60.84 in early trading while DreamWorks shares were halted for the news at $32.20.
The Justice Department and the Federal Trade Commission will decide which agency reviews the transaction from an antitrust perspective, according to the Comcast filing. The transaction doesn't require Federal Communications Commission approval.