SoftBank In Talks to Acquire DreamWorks (DWA) - WSJ

(Updated - September 29, 2014 6:30 AM EDT)

DreamWorks Animation SKG (NASDAQ: DWA) is in talks to be acquired by Japan's SoftBank, according to reports late Saturday from the Wall Street Journal.

Shares of DreamWorks have been volatile since coming public a decade ago based on the success or failure of its animated films. So far this year the stock is down 37% based in part on a weaker than expected showing for How To Train Your Dragon 2.

UPDATE: The Hollywood Reporter said that SoftBank would bid $32/share for DreamWorks Animation.

Commenting on the speculation, Stifel analyst Benjamin Mogil said while they have heard takeover speculation in the past, this sounds more strategically sound. :"Unlike other consumer technology platform/distribution companies (Google, Yahoo!, Netflix), which have deliberately chosen to remain open platforms with no ties to any particular content companies, SoftBank's past bid for Universal Music signals a desire to own content," Mogil said. "More importantly the bid for Universal Music indicates a stomach for content companies in the midst of large-scale changes in consumption patterns, which to a lesser degree is true for DWA as the shift away from ownership (DVD) to rental (SVOD/VOD) continues as the company also invests in its Consumer Products segment." Despite the news, the firm maintained a Hold rated as they await more clarity on the possibilities of this deal.

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