Hasbro has ended talks with DreamWorks Animation, people briefed on the matter said on Friday, ending discussions that would have united the parent companies of the Transformers and Shrek.
The breakup of the negotiations followed a sharp slide in Hasbro‘s shares after reports of the talks emerged late Wednesday. The toy maker’s shares had fallen nearly 5 percent since then, closing on Friday at $54.02. The fall in Hasbro’s share price was notable because the company had weighed paying both stock and cash, people briefed on the matter have said.
Also playing a role was a negative private reaction by the Walt Disney Company, which comprises roughly 30 percent of Hasbro’s business through licenses for “Star Wars,” Marvel characters, “Frozen” and the Disney Princesses toy line.
Disney was predictably upset that Hasbro would discuss a merger with DreamWorks Animation — its primary cartoon competitor — only weeks after the toy maker was given a lucrative Princesses contract, having taken it away from Mattel, one of these people said. As a toy partner, Hasbro receives early access to private information about films in Disney’s pipeline.
Representatives for Hasbro, DreamWorks Animation and Disney declined to comment or were not immediately available.
The end of talks between Hasbro and DreamWorks Animation, reported earlier by The Hollywood Reporter, would be the second demise of a potential takeover of the film studio since the fall. In September, the Japanese telecommunications company SoftBank ended discussions with DreamWorks Animation, again shortly after reports about the negotiations emerged in the press.
A union of Hasbro and DreamWorks Animation was rooted in the belief that the two could create a fruitful partnership of content and production. The toy maker would have found new outlets for its stable of brands, including G.I. Joe and My Little Pony. Its chief executive, Brian Goldner, has long shown interest in broadening his company out into a global entertainment powerhouse.
And DreamWorks Animation, which was spun off from the privately held DreamWorks Studios, would have secured a new source for movies and series, both for television and the Internet. A deal would have come at a time when some of the company’s recent releases have failed to meet expectations: Though franchises like “Shrek” and “Madagascar” were true blockbusters, more recent films like “Turbo” and “Rise of the Guardians” have underperformed.
An analyst at BTIG Research, Richard Greenfield, wrote in a blog post on Friday that the studio has failed to transform its hits into enduring franchises as rivals have. Instead, the company has relied on marketing campaigns and the higher ticket prices that 3D versions of film releases command — and still fallen short of profitability expectations.
He also added that while the studio secured a lucrative licensing contract with Netflix for television content, that deal will eventually expire. When that happens, the analyst wrote, Mr. Katzenberg and his executives will be unlikely to secure the same high level of fees.
“We can understand why DWA is in a rush to sell,” Mr. Greenfield wrote, referring to DreamWorks Animation. “We just can’t see why Hasbro or anyone else would be in a rush to buy.”