Paramount agrees to acquire DreamWorks

Film studio Paramount Pictures has confirmed that they have decided to acquire the rival DreamWorks SKG in a $1.6 billion deal. This deal would help the studio strengthen its position in the market. Viacom owned Paramount has said that the deal would cost it at a net price of around $500 million to $650 million after selling off DreamWorks’ 59-title library.

DreamWorks has in its kitty mega movies like American Beauty and Gladiator. The final price of this $1.6 billion also includes assumption of debt and equity value of $774 million. Viacom has also said that Steven Spielberg and DreamWorks co-founder David Geffen would continue to work with DreamWorks as producer-director and chairperson, respectively.

This duo is likely to make around four to six live action films a year for the company. The acquisition would also mean that the DreamWorks’ sales and infrastructure would be combined with Paramount’s own network. The deal is also expected to be closed by the end of first quarter of next year.

Brad Grey, the Paramount chairperson said in a statement about this deal: “Paramount will be able to significantly enhance its pipeline of groundbreaking motion pictures — a key strategic objective in restoring Paramount’s stature as a leader in filmed entertainment.”

Viacom wants to sell the ownership stake in the library of their newly purchased studio to lower the investment in the transaction. They have valued the library at $850 million to $1 billion.