DreamWorks in merger talks with Hasbro

LOS ANGELES — DreamWorks Animation is in talks with Hasbro to merge the toon studio with the toy maker, according to individuals familiar with the discussions, Variety can confirm. In another potential deal, DWA is considering selling a stake of AwesomenessTV to Hearst Publishing for $81.5 million.

The companies were unavailable or declined to comment. Deadline first reported the talks.

The discussions — as well as other potential investments in DreamWorks from Japan’s Softbank and China’s Alibaba — in recent months signal that DWA-chief Jeffrey Katzenberg is clearly looking for a partner with whom he can restructure a company that has recently struggled at the box office with a string of misses with “Rise of the Guardians,” “Turbo” and “Mr. Peabody & Sherman.” “How to Train Your Dragon 2” is one of its few hits of late. DWA’s next film is “The Penguins of Madagascar.”

The timing of the merger talks come a decade after DWA became a publicly traded studio, and as Katzenberg has been aggressive in expanding the house that “Shrek” built into other areas — including television, digital, consumer products, live entertainment — so that its bottomline doesn’t have to solely rely on the box office.

Doing that, of course, has made DWA more attractive to investors.

A merger is said to take at least 60 days, with Hasbro being asked to pay $35 a share for DreamWorks. DWA’s stock closed at $22.37 on Wednesday. Hasbro closed at $57.47.

Hasbro is the larger company, with a market cap of $7.1 billion, while DWA is valued at about $1.89 billion.

Katzenberg would become the head of a combined Hasbro-DreamWorks, according to individuals with knowledge of the talks.

Naturally, there is still a lot to work out, as both companies are publicly traded. DWA would also have to likely renegotiate its current contract with 20th Century Fox, which distributes the toon studio’s films. Hasbro has negotiated one-off deals for its own films. Paramount has ‘Transformers” and “G.I. Joe,” while Universal released “Ouija,” and has “Jem and the Holograms” forthcoming. It’s looking for a distribution partner for “My Little Pony,” while Sony has already secured rights to “Candy Land.”

If the two companies can come to terms, it would create the only film studio to own an actual toy production business. Studios typically license their film and TV properties to Hasbro or rival Mattel.

Hasbro currently produces playthings for Disney, Marvel and Lucasfilm’s “Star Wars,” as well as Rovio’s “Angry Birds” franchise.

The toymaker’s own brands include Transformers, G.I. Joe, Candy Land, Monopoly, Risk, Ouija, My Little Pony, Littlest Pet Shop, Care Bears and Magic: The Gathering.