(By Balaseshan) Dreamworks Animation Skg Inc. (NASDAQ:DWA) said it has agreed to buy entertainment company Classic Media for $155 million cash, in a move to expand its entertainment characters library.
Dreamworks expects the transaction to be accretive to its earnings in the first full year following the completion of the acquisition. The transaction is predicted to be completed during the third quarter.
The Glendale, California-based Dreamworks will pay cash for the library of intellectual property of Classic Media, which is owned by the Boomerang Media Holdings I LLC, a portfolio company of Chicago-based private equity firm GTCR.
The acquisition of Classic Media will be financed through a combination of cash and borrowings under DreamWorks' revolving credit facility. The purchase price of $155 million includes amounts required to retire indebtedness.
As part of DreamWorks' ongoing diversification strategy, this acquisition combines its hit-driven business with Classic Media's extensive and sustainable library revenue stream.
Classic Media, which earned net revenue of $82.2 million for the 12 months ended February 29, 2012 and operating profit of $19.2 million, has about 80 employees and is headquartered in New York City with offices in the UK and a division, Big Idea Entertainment, in Nashville, Tennessee.
Classic Media's library of intellectual property, which is focused on family characters and brands, features a vast collection of filmed entertainment with over 450 titles and more than 6,100 episodes of animated and live-action programming.
Classic Media owns one of the world's largest comic book archives and media rights to the titles in the Golden Books library, which have sold over two billion copies worldwide. Their properties have been distributed in over 170 territories around the globe.
Classic Media's joint venture with Jay Ward Productions, a legend in animation, manages the rights to the entire Jay Ward animated catalog, which includes Rocky & Bullwinkle and Mr. Peabody & Sherman. DreamWorks' 3D feature film Mr. Peabody & Sherman is scheduled for release on December 25, 2013.
J.P. Morgan Chase & Co. acted as financial advisor and Cravath, Swaine & Moore LLP and O'Melveny & Myers LLP served as legal advisors to DreamWorks in connection with the transaction. Jefferies & Co. Inc. acted as financial advisor and Kirkland & Ellis LLP served as legal advisor to Classic Media in connection with the transaction.
DWA is trading down 1.36% at $18.90 on Monday. The stock has been trading between $16.34 and $22.38 for the past 52 weeks.