Paul Allen to sell most of DreamWorks stake

Billionaire Paul Allen is selling the majority of his stake in DreamWorks Animation SKG Inc. and stepping down from the board of the animation company he helped bankroll in its infancy.

The Glendale company, best known for its “Shrek” films, on Monday said Allen’s investment vehicle Vulcan Inc. would sell 10 million to 12 million of his shares in a registered public offering through brokerages Goldman Sachs & Co. and Bear Stearns & Co.

In addition, DreamWorks Animation said it would repurchase $150 million of his stock, or about 5 million shares.

The move enables Allen, co-founder of Microsoft Corp., to further cash in on his investment in the film company.

For DreamWorks, it gives Chief Executive Jeffrey Katzenberg and the board a freer hand in running the business and removes Wall Street’s uncertainty about when Allen would step away from the company.

The sales were expected to generate about $500 million for Allen, but he will still be one of DreamWorks Animation’s major stakeholders, with about 6 million shares.

In a statement, Allen called the move “part of an ongoing effort to rebalance” the Vulcan portfolio.

“I am pleased to have been a principal investor in DreamWorks since its inception and proud of the company’s many successes to date,” he added.

Allen plowed more than $500 million into DreamWorks when it was launched in 1995 by moguls Steven Spielberg, Katzenberg and David Geffen, as a combined live-action and animation movie studio.

DreamWorks Animation was spun off in a public offering in October 2004, partly as a way to begin repaying Allen’s investment.

Allen scaled back his stake in the animation company in November by selling about 12 million shares.

DreamWorks Animation shares slumped last summer, but the stock has rebounded and is trading at its highest level since May 2005.

In Monday’s session before the announcement, the shares rose 11 cents to $32.97.

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josh.friedman@latimes.com