Toy and board-game manufacturer Hasbro Inc is in the early stages of talks to merge with DreamWorks Animation, the film studio responsible for titles like Shrek, How to Train Your Dragon and Chicken Run.
When Deadline first broke the story, both sides declined to comment on the possible deal.
DreamWorks is believed to have a current market value in the region of €1.5 bn.
The company has been diversifying its interests in an attempt to build on its franchises and become more like Disney.
The film industry can be volatile; at the moment the performance of an individual film can have a massive effect on DreamWork's stock price. Recently the animation house has experienced a number of damaging misses at the box-office, with poor-performing titles like: Rise of the Guardians, Turbo and Mr. Peabody & Sherman.
Hasbro has previously lent its Transformer toys to the big-screen, taking the staring roll in DreamWorks Pictures' blockbuster franchise of the same name.
Its products include iconic-brands like Monopoly, Cluedo, My Little Pony and Furby. The company is much bigger than DreamWorks, and valued at close to €5.6bn.
One of Hasbro’s interests is Star Wars merchandise. Star Wars: Return of the Jedi introduced the Ewok, a small teddy-bear like creature. Many fans saw this as a cynical move to make money through toy sales. It is not hard to spot the common interest that these companies have in this potential merger; both will hope to sell massive amounts of merchandise from future DreamWorks films.
The CEO of DreamWorks, Jeffrey Katzenberg, is expected to retain his position if a deal is reached.
