Analyst: Hasbro Inc. Dreamworks Deal Offers Synergies

Dreamworks Animation Skg Inc.

acquisition by Hasbro Inc.

would offer both revenue and cost synergies, an analyst said Thursday. Reports of negotiations that could lead to a deal were carried Thursday by several news agencies although the rumor is unconfirmed by the companies. Dreamworks' controlling shareholder Jeffrey Katzenberg is reportedly holding out for $35 a share. Morgan Stanley's Ryan Fiftal calculated that based on expected earnings, that price would be higher than that paid by Walt Disney Co.

for Lucasfilm Ltd. in 2012 and roughly comparable to Disney's acquisition of Marvel Entertainment in 2009. Fiftal said a merger could help Dreamworks' plans to increase revenue derived from consumer products based on its films, while combined distribution could save costs. Moreover, Hasbro brands like G.I. Joe and My Little Pony could suggest film revenue sources for Dreamworks, Fiftal said. Although merger talks between Dreamworks and Softbank Corp (USA)

were never confirmed by the companies, a prospective deal reportedly fell apart in September when Katzenberg rejected a $32 a share offer. Fiftal noted separate rumors that privately held Hearst Corp. has offered $81.25 million for a 25 percent stake in Dreamworks' AwesomnessTV, implying a total value of $325 million. Including upcoming performance-based payments, Dreamworks paid $120.3 million for AwesomnessTV in 2012, according to Fiftal, and the unit paid an additional $15 million for a recent acquisition. Dreamworks traded recently at $25.52 a share, up 14 percent; Hasbro was off more than 4 percent at $54.98.