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 An acquisition of DreamWorks by SoftBank would make it part of a
cash-rich Japanese communications and media company that, under
founder and chief executive Masayoshi Son, has shown a willingness
to take big bets on combining disparate businesses.
The talks were first reported by the Hollywood Reporter, which
quoted an unidentified source as saying a buyout would value
DreamWorks at $3.4 billion.
The entertainment trade publication said SoftBank had offered $32
per share for DreamWorks, a substantial premium to the stock's
Friday closing price of $22.36.
Buying DreamWorks, which is headed by veteran Hollywood producer and
film executive Jeffrey Katzenberg, would make SoftBank the second
Japanese technology company to buy a Hollywood studio, following
Sony Corp, which bought Columbia Pictures in 1989.
SoftBank has recently cashed in on a share of its investment in
Chinese e-commerce giant Alibaba and dropped its pursuit of mobile
carrier T-Mobile US in the face of opposition from anti-trust
regulators in the United States.
Last week, SoftBank booked a $4.6 billion gain on the share listing
of Alibaba Group in New York <BABA.N>. SoftBank retains a 32 percent
stake, making it Alibaba's biggest shareholder.
SoftBank has significant stakes in other large listed entities,
including U.S. mobile carrier Sprint, through which it had pursued a
deal for T-Mobile, internet portal Yahoo Japan and online games
maker GungHo Online Entertainment .
A SoftBank spokesman said the company had no comment on the reported
talks with DreamWorks. A representative of DreamWorks could not be
immediately reached for comment.
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In July, SoftBank hired former Google, executive Nikesh Arora to run
a newly created unit called SoftBank Internet and Media, reporting
directly to Son, in a move that stoked speculation the
telecommunications company could be considering a move to acquire
content production assets.
SoftBank held the equivalent of more than $17 billion in cash and
equivalents as of the end of June, its most recent reported quarter.
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DreamWorks, based in Glendale, California, has seen its share price
has drop 37 percent this year after two consecutive quarterly
losses, a string of weak-performing releases such as "Mr. Peabody &
Sherman" and investor concern about the production costs of its
movies. In July, DreamWorks said the U.S. Securities and Exchange
Commision was investigating a writedown it took at the end of 2013
on the animated flop "Turbo".
Dreamworks Animation was spun off from DreamWorks Studios in 2004 as
a separate listed company.
The earlier Dreamworks studio had been founded in 1994 by Steven
Spielberg, David Geffen and Katzenberg, who moved with the spin-off
and remains chief executive of the animation company, which also has
the franchise hit "Kung Fu Panda" and owns the rights to Felix the
Cat.
The move by SoftBank comes as Alibaba is also looking to expand its
video content offered through a set-top box in China. In July, the
company announced a partnership with Lions Gate Entertainment for
its titles including "The Hunger Games".
Sony rebuffed a proposal from hedge fund Third Point to spin off its
entertainment business last year in order to separate it from its
loss-making electronics division.
(Editing by Paul Tait and Alex Richardson)
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