Comcast Moves to Acquire DreamWorks

DreamWorks Animation SKG Inc. (NASDAQ: DWA) saw its shares take off on Thursday morning following the announcement that Comcast Corp. (NASDAQ: CMCSA) will acquire the studio. Ultimately, DreamWorks will become part of the Universal Filmed Entertainment Group, which includes Universal Pictures, Fandango and NBCUniversal Brand Development.

Under the terms of the agreement, DreamWorks has an equity value of roughly $3.8 billion. Stockholders will receive $41 in cash for each share of DreamWorks common stock. The agreement has been approved by both boards of directors of DreamWorks Animation and Comcast, and the controlling shareholder of DreamWorks Animation has approved the agreement by written consent.

The transaction is expected to close by the end of 2016, but it is still subject to shareholder and regulatory approval.

DreamWorks Animation CEO and co-founder Jeffrey Katzenberg will become the chairman of DreamWorks New Media, which will oversee the company’s interests in Awesomeness TV and NOVA.
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Steve Burke, CEO of NBCUniversal, commented:

DreamWorks Animation is a great addition to NBCUniversal. Jeffrey Katzenberg and the DreamWorks organization have created a dynamic film brand and a deep library of intellectual property. DreamWorks will help us grow our film, television, theme parks and consumer products businesses for years to come. We have enjoyed extraordinary success over the last six years in animation with the emergence of Illumination Entertainment and its brilliant team at Illumination Mac Guff studio. The prospects for our future together are tremendous. We are fortunate to have Illumination founder Chris Meledandri to help guide the growth of the DreamWorks Animation business in the future.

Comcast will take over DreamWork’s film franchise properties, such as Shrek, Madagascar, Kung Fu Panda and How to Train Your Dragon, just to name a few.

Shares of DreamWorks were halted before the bell on Thursday morning, and then resumed trading shortly after. The stock was trading up 24% at $39.99 in the early afternoon, with a consensus analyst price target of $25.00 and a 52-week trading range of $17.02 to $32.30.

Shares of Comcast were trading up fractionally at $61.82, with a consensus price target of $69,96 and a 52-week range of $50.00 to $64.99.