The Studios' Next Acquisition Target: DreamWorks Animation

dreamworks animation

Now that Disney (DIS) plans to buy Marvel (MVL) for $4 billion, some large entertainment company or foreign studio is bound to buy DreamWorks Animation somewhere above $38 per share, writes Goldman Sachs analyst Ingrid Chung.

The logic:

We believe that today’s announcement highlights the strategic value of key brands and pure play content companies with established franchises to large entertainment companies.

We did not view Disney a potential acquirer of DreamWorks Animation given its Pixar acquisition, but we continue to believe that DreamWorks Animation would be attractive to other large entertainment companies (or a foreign studio) without CGI animation capabilities given (1) CGI films generate higher returns and more consistent profits; (2) the franchise value of DreamWorks Animation’s content would fit well with a conglomerate, which could leverage DWA’s content over multiple platforms; (3) DreamWorks Animation’s relatively small size and clean balance sheet; and (4) lack of regulatory hurdles. We introduce our 2010 quarterly EPS estimates of $0.25, $0.44, $0.46, $1.17.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.