DreamWorks Animation in deal talks with Hasbro

DreamWorks Animation is in talks to sell the company to toy giant Hasbro Inc., said a person familiar with the negotiations.

The Glendale studio behind the “Shrek,” “Kung Fu Panda” and “Madagascar” movies has been in discussions to combine operations with Hasbro, the Pawtucket, R.I., company that is one of the largest toy makers in the world, said the person, who was not authorized to discuss the talks.

Representatives of DreamWorks and Hasbro declined to comment. “We don’t comment on rumor and speculation,” said Matthew Lifson, a spokesman for DreamWorks Animation.

It’s unclear how soon a deal could emerge but DreamWorks Animation Chief Executive Jeffrey Katzenberg has made no secret of his desire to sell the studio he co-founded 20 years ago.

Katzenberg had been in talks in September to sell the studio to Japanese telecommunications giant SoftBank, but those discussions fizzled. Katzenberg also made an unsuccessful effort to interest Rupert Murdoch’s 21st Century Fox in buying the company.

A sale could offer advantages to both companies, which both have strong family brands.

Buying DreamWorks Animation would allow Hasbro to expand its foray into Hollywood by giving the company access to DreamWorks’ large library of characters, including the Classic Media characters the company acquired in June 2012.

Hasbro has a growing entertainment division based in Burbank. Its toys and action figures have spawned some big hits at the box office. The “Transformers” movies have grossed about $3.75 billion in ticket sales worldwide, according to Box Office Mojo. “G.I. Joe” has also become a film franchise.

Hasbro and Universal Pictures in 2008 announced plans to turn at least four game titles into feature films, including “Monopoly,” “Candy Land” and “Magic, the Gathering.”

Hasbro could also give DreamWorks the financial stability it lacks because of its heavy reliance on the fortunes of its animated movies. The studio has weathered a rough patch at the box office, taking three write-downs in two years on its films.

DreamWorks has been attempting to diversify operations to reduce its dependence on feature films by expanding its television and consumer products businesses. Joining Hasbro also would enable DreamWorks to significantly expand its toy merchandise.

DreamWorks shares, which have fallen sharply this year, rose 34 cents, or 1.5%, to $22.37 on Wednesday. The company has a market value of $1.91 billion.

The talks were first reported by Deadline.