Paul Allen and GE are cashing in on “Shrek 2” and “Madagascar.”
With the green ogre raking in monster moolah on homevideo last quarter and tracking looking strong for DreamWorks Animation’s next pic, Allen, Korean company CJ Entertainment and Vivendi Universal Entertainment, now a part of GE, are planning a $500 million secondary stock offering timed for after the May 27 release of “Madagascar.”
Plans come soon after the 180-day lock-up period for major shareholders following DreamWorks Animation’s October IPO, which was designed primarily to help major investors including Allen cash out.
The Microsoft co-founder invested over $700 million in DreamWorks.
Because the offering consists entirely of outstanding shares, DreamWorks Animation won’t reap any financial benefits from the transaction.
Allen, however, is set to make about $392 million, assuming the company’s stock price remains constant over the next two months. GE will generate $62.3 million, CJ Entertainment about $49.9 million.
Offering is clearly timed to take advantage of a potential rise in DreamWorks Animation’s stock price following the “Madagascar” bow. Because the studio releases only two pics per year, its stock price can get a boost from a strong opening that foretells big profits in theaters and on homevideo.
If DreamWorks Animation shares do jump following “Madagascar,” Allen, GE and CJ could make more than $500 million. If “Madagascar” disappoints, however, they may find themselves taking in less than expected and could delay the sale.
Offering represents 12.3% of DreamWorks Animation’s total outstanding shares. Allen, the company’s biggest shareholder, will be selling about 28% of his stake, while CJ Entertainment is divesting 27% and GE is shedding 47%.
DreamWorks Animation stock has climbed 41% since its October market debut, giving the sellers a healthy return on their investment.
Shares in the “Shrek” maker closed approximately flat Monday at $39.67.