Hasbro had the plan to purchase DreamWorks and talks were going well until DreamWork’s stocks were analyzed and found to be too shaky for such a handsome asking price. The deal would have put a whopping $2.3 billion in Hasbro’s pocket, as well as use of the animations company name that is known for so many blockbuster movies.
DreamWorks Animation is responsible for bringing us movies such as Chicken Run and Antz, not to mention the Shrek series. All of their animated movies grossed more than their budgets and bring in a consistent income in royalties. With decades of movies under their belt they are a company that is wanted by many.
Talks were just made public on Wednesday and came to a quick end on Friday. Although DreamWorks Animation is reputable and has great worth, it is a risk to acquire. While the stock market tells the tale of a hard week, there is no knowing when shares will reach the target price Hasbro was aiming for.
On Thursday alone DreamWorks lost a frustrating $300 million in capital. After the announcement on Friday the stocks fell quickly. Ending the day at an astronomically low price of less than $2 a share, it did not come close to the $30 to $35 a share DreamWorks was negotiating for.
DreamWorks has been on the look for a buyer since at least September, as far as the public knows. Hasbro took the opportunity to make a deal as earlier prospects fell through. With great movies comes great responsibility. Unfortunately DreamWorks does not turn out movies on a consistent schedule, which brings in another risk factor; although when they do they are high grossing and often turn into a conglomerate of sales including games, toys, book, and more. When the stock market speaks, Hasbro listens.