Allen tries to control DreamWorks
investor thinks Flushed Away will flop at the box office
Paul Allen is forcing DreamWorks Animation to sell $14 million worth of stock following the November 3 release of Flushed Away.
(Source: www.imdb.com)
After announcing that he is dissolving his DreamWorks partnership with David Geffen, Steven Spielberg and Jeffrey Katzenberg, entrepeneur Paul Allen is forcing the studio to sell 14 million shares right after Flushed Away's November 3rd release.
In the announcement, Allen's company, DW Investment Inc., said the number of shares offered must "cause a satisfaction event, " meaning that Allen must make back 50% of his initial investment in DreamWorks Animation SKG.
Allen's complex tactic is based on the belief that Flushed Away will perform so poorly at the box office that it will depress the studio's stock further, thus benefiting the entrepeneur in the long run. The sale will make Allen DreamWorks' largest shareholder, with $350 million worth of stock.
DreamWorks' shares have been trading well below their initial public offering ($28/share) due to the weak performances of films like Over the Hedge, and nervous investors wondering when Allen would make this long-awaited announcement.
Some analysts, like David W. Miller Sanders Morris Harris Group and Bank of America's Michael Savner, had actually placed a "buy" rating on DreamWorks Animation stock. They claimed that share prices would jump in 2007, thanks to the release of movies like Shrek the Third and Bee Movie.
Paul Allen was ranked the 6th richest person in the world, according to Forbes magazine. His fortune started when he co-founded Microsoft with Bill Gates. He co-founded DreamWorks in 1996, with Steven Spielberg, Jeffrey Katzenberg and David Geffen.
