Published On: Tue, Sep 30th, 2014

Rumors of a Softbank Buyout of Dreamworks Sees Rude Awakening

stocks down for turbo

There was plenty of chatter about a possible takeover of Dreamworks Animation by Softbank, as reported in this Jewishbusinessnews article. However, the Wall Street Journal says these talks have cooled and an actual buyout is not likely, although some sort of deal may be on the horizon. According to WSJ, it “wasn’t immediately clear” why an one or the other party backed away from an outright acquisition, but the New York Times has a few theories.

For one thing, Dreamworks’ earnings have been volatile if not downright lumpy, with some top grossing films along with a few duds. “Shrek” was a hit but “Turbo” hardly took off. One could think this would result in Softbank’s ability to pick up Dreamworks at a bargain price, but this isn’t the first potential deal Softbank has walked away from. There is little wonder why given its onerous debt at 3.1 times net debt to earnings before interest, taxes, depreciation and amortization. It has 1, 300 stakes in various companies, and after making as much as $70 billion with its Alibaba stake, perhaps Softbank has decided it doesn’t need Dreamworks.

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