STOCK QUOTES     More market data...

DreamWorks Animation aims to raise $725M in IPO

By Brett Cole
Bloomberg News

AP Princess Fiona and Shrek share a moment in a scene from one of DreamWorks Animation's hits, "Shrek." The company set terms yesterday for an initial public offering.

E-mail this article Print this article Search archive Most read articles Most e-mailed articles

DreamWorks Animation, creator of the Shrek films, said the company and its investors will sell up to $725 million of shares in an initial public offering (IPO) to fund movie production and repay debt.

DreamWorks Animation will sell 29 million shares at between $23 and $25 a share, the company said in a Securities and Exchange Commission filing.

DreamWorks Chief Executive Jeffrey Katzenberg, 53, is taking the animation unit public in a year of box-office success: "Shrek 2" has brought in $876.6 million in worldwide sales and the company's "Shark Tale" had generated $87.3 million as of Sunday. The company has made money in two of the past five years, according to a regulatory filing.

"They key is that they have to produce content that I want to see," said David Baker, a Boston-based fund manager at North American Management. "Historically, these types of companies have not been run well. I don't know if that's going to be the case at DreamWorks, but that certainly is the issue at hand."

	Jeffrey Katzenberg, CEO of DreamWorks

Baker oversees $550 million in assets. He said he's considering an investment in DreamWorks Animation.

DreamWorks Animation is selling 27.5 percent of its total stock in the IPO, the company said in its SEC filing. The company has a total of 105.6 million shares and its market value at $25 a share would be $2.64 billion, about half that of Pixar.

DreamWorks Animation plans to use $175.5 million of the proceeds for the IPO for "general corporate purposes" and the remaining money to repay $355 million of a $405 million loan, the company said in the SEC filing.

In the three months ending Sept. 30, DreamWorks Animation had operating income of between $25 million and $30 million on revenue of between $230 million and $240 million, the company said in the filing.

	David Geffen to share control of voting shares.

DreamWorks Animation in the filing said the sale of all registered shares may raise up to $844 million.

The shares will trade on the New York Stock Exchange under the symbol "DWA," the company said. DreamWorks Animation in July filed to raise $650 million in its initial share sale.

"I think it's going to trade at a premium," said Richard Steinberg, president of Steinberg Global Asset Management, in Boca Raton, Fla., which owns shares of media companies, including Time Warner and Viacom among its $375 million under management. "You have got the brand recognition of the principals, so I would expect this to be a hot deal."

	Steven Spielberg will get $163.9 million in stock.

Steinberg said he's considering purchasing DreamWorks Animation shares.

The animation unit is part of closely held DreamWorks, founded in 1994 by film director Steven Spielberg, former Walt Disney Co. studio chief Katzenberg and music executive David Geffen.

The sale allows DreamWorks to capitalize on its strongest unit after box-office failures with its live-action movies and the sale of its music unit.

Katzenberg and Geffen will control more than 90 percent of DreamWorks Animation voting shares and will "have the collective ability to control all matters requiring stockholder approval," the SEC filing said.

Billionaire and Microsoft co-founder Paul Allen will receive Class A stock worth $884.9 million and Spielberg will receive Class A shares worth $163.9 million.

Copyright © 2004 The Seattle Times Company

E-mail this article

Print this article

Search archive

More business & technology headlines...