Comcast to buy DreamWorks Animation for $3.8 billion

The acquisition will add to Universal's film library major childrens' franchises, which it could tap for its theme parks and consumer products businesses

Comcast Corp, the owner of NBCUniversal, said on Thursday it would buy Hollywood movie studio DreamWorks Animation SKG Inc for $3.8 billion to boost its family-friendly offerings and help it take on No. 1 player Walt Disney. Comcast's acquisition of DreamWorks Animation will add to Universal's film library major childrens' franchises such as "Shrek" and "Kung Fu Panda," which it could tap for its theme parks and consumer products businesses.

Comcast's Universal Pictures has shown signs of success with family films like "Despicable Me" and "Minions", but this deal will ramp up its portfolio and fledgling animation business Illumination Entertainment.

DreamWorks' burgeoning TV business will also be a boon to Universal, Macquarie analyst Amy Yong said in a research note. DreamWorks signed a deal earlier this year with Netflix to distribute series such as "The Adventures of Puss in Boots" and develop original series on the streaming subscription service.

The $41-per-share cash offer represents a premium of about 27 percent to DreamWorks' Wednesday close.

DreamWorks shares, which have gained nearly 50 percent in the last six months, soared 24 percent to $39.95 per share on Thursday.

DreamWorks Chief Executive Jeffrey Katzenberg will become chairman of DreamWorks New Media, which will include the company's ownership interests in Awesomeness TV and NOVA. He will also serve as a consultant to NBCUniversal.

DreamWorks Animation was spun off from DreamWorks Studios in 2004. The studio was founded in 1994 by Katzenberg, Steven Spielberg and David Geffen.

The animation studio had come close to being sold before but never sealed the deal.

In 2014, DreamWorks Animation held talks about a possible sale to Japanese communications and media company Softbank Corp, a source with knowledge of the matter told Reuters at the time.

Later that year, toymaker Hasbro Inc held preliminary talks to buy DreamWorks Animation, according to another source at the time. The talks formally ended a few days later after Hasbro's board voted to walk away.

Stifel analyst Benjamin Mogil said he did not think another bidder would come in and top Comcast's offer "given the valuation and the operational role for DreamWorks Animation CEO Jeffrey Katzenberg in this deal."

DreamWorks Animation was advised by boutique investment bank Centerview Partners Holdings LLC, which Reuters first reported on Wednesday, and legal adviser Cravath, Swaine & Moore LLP. Comcast's legal adviser was Davis Polk & Wardwell LLP and the company did not list a financial adviser.