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DreamWorks Animation IPO Gaining Momentum

According to BUSINESS WEEK, DreamWorks has retained investment bankers Goldman Sachs and JP Morgan to access the timing and procedure of a potential IPO for its animation unit to help pay off its enormous debt. With SHREK 2 coming out May 19, SHARK TALE slated for Oct. 1, 2004, and the FATHER OF THE PRIDE series debuting this fall, the timing of the IPO couldn't be better.

Given the recent $100 million investment in DreamWorks by Japanese-owned Kodokawa Holdings for a 2.83% stake, the studio is now valued at more than $3.5 billion, putting the value on the animation unit at $2.5 billion to $3 billion.

Under the IPO scenario, DreamWorks employees are likely to get stock options, plus investors such as Paul Allen (who provided an initial $675 million for a 24.5% share and is scheduled to get his investment back next year) will get a nice return. DreamWorks founders Steven Spielberg, Jeff Katzenberg and David Geffen, each of whom owns a 20% share, will likely retain the same stake in the new unit, with Katzenberg becoming an officer.