Comcast Corporation (NASDAQ:CMCSA), the owner of NBCUniversal, signed an agreement to acquire DreamWorks Animation (NASDAQ:DWA) for $3.8 billion to strengthen its growth and competitiveness particularly in offering family-friendly entertainment.
Under the terms of the agreement, the DreamWorks shareholders will receive $41 in cash for every common stock they own. The acquisition price represents around 27% premium to the closing price of the company’s stock on Wednesday.
The stock price of DreamWorks increased more than 24% to $39.97 per share around 2:11 in the afternoon today.
According to ComCast, DreamWorks will become part of the Universal Filmed Entertainment Group, which includes of Universal Pictures, Fandango, and NBCUniversal Brand Development.
DreamWorks is one of most admired family brands
In a statement, NBCUniversal described DreamWorks as one of the most admired family brands. Some of its most popular characters and franchises include Shrek, Madagascar, Kung Fu Panda and How to Train Your Dragon.
Steve Burke, CEO of NBCUniversal believes that DreamWorks is a great addition because it has 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. The prospects for our future together are tremendous,” said Burke.
He added they are “fortunate to have Illumination founder Chris Meledandri to help guide the growth of the DreamWorks Animation business in the future.”
NBCUniversal is a perfect home for DreamWorks
DreamWorks CEO and co-founder Jeffrey Katzenberg said, “I am proud to say that NBCUniversal is the perfect home for our company; a home that will embrace the legacy of our storytelling and grow our businesses to their fullest potential.”
Katzenberg will step down as CEO of his company after the completion of the acquisition, which is expected by the end of 2016. He will serve as consultant to NBCUniversal.
Katzenberg will also become the Chairman of DreamWorks New Media, which includes the company’s stakes in Awesomeness TV and NOVA.
He said, “As for my role, I am incredibly excited to continue exploring the potential of Awesomeness TV, NOVA and other new media opportunities, and can’t wait to get started.”
Over the past few years, Katzenberg had been looking for buyers to ensure the future of his company. Reuters previously reported that DreamWorks engaged in discussions with SoftBank and Hasbro regarding a potential sale but did not materialize.
Ken Kleinberg, an entertainment industry attorney was quoted by the Los Angeles Times, saying, “It represents a ferocious dedication on the part of Jeffrey to keep the company afloat. Jeffrey is maybe ready to step down and not have these burdens anymore…. He’ll be exiting on a high note.”