Paramount film studios, part of Viacom, has purchased DreamWorks, makers of Shrek and Madagascar for $1.6 billion in cash, the company said on Sunday.DreamWorks SKG, which created successful computer animated features such as Shrek, was also sought after by NBC Universal, a unit of General Electric. "In nine months we were never able to get an agreement," said David Geffen, one of the founders of DreamWorks, during a telephone conference call. The final deal gives Paramount access to 59 films in DreamWorks’ library, including Gladiator, American Beauty, War of the Worlds, Saving Private Ryan, and Catch Me if You Can.

Paramount plans to sell off the catalogue, according to the company, for somewhere between 850 million dollars and one billion dollars, said Brad Grey, without revealing the names of possible buyers.DreamWorks Animation receives 75 million dollars to pay off debt. No details of the full amount of debt were revealed, but Wall Street last week put the amount at some $500 million."We were never able to produce enough films to make it economically sound," Mr Geffen said. "Now we’ll be able to produce films at much less costs," he said.

Mr Geffen said that with few exceptions, the approximately 500 employees of DreamWorks will stay on the job or will take similar jobs with Paramount.Paramount takes over all of DreamWorks’ current projects and creates an ongoing partnership with Steven Spielberg, who has directed some of DreamWorks’ most successful films.Spielberg and Geffen are to produce four to six live-action films per year of the 14-16 films Paramount said it expects to make next year.DreamWorks Animation also announced that it had struck a seven-year deal to distribute its films in theaters, television and home DVD and video players worldwide.

The agreement was conditioned on Paramount’s purchase of DreamWorks. "We are pleased with the benefits this new relationship provides DreamWorks Animation," stated Jeffrey Katzenberg, chief executive of DreamWorks Animation and formerly of Walt Disney studios.DreamWorks Animation will also be able to collaborate on new television programming owned by Paramount’s parent company, Viacom, including

Nickelodeon, MTV, Nick at Nite, VH1, BET, TV Land, and Comedy Central. "Over the past decade, DreamWorks Animation has produced some of the industry’s most successful movies," said Brad Grey, chief executive of Paramount Pictures Group.The deal will be completed in the first quarter of 2006, Mr Greffen said. DreamWorks SKG carries the initial of its founders: Spielberg, Katzenberg, and Geffen, who made his fortune in the recording industry by producing the band Nirvana. (AFP)

Air Sahara’s stance about divesting only a minority stake in the company has come under fire as key bidders — Kingfisher Airlines and SpiceJet — allege that the actual size of the stake on sale seems ambiguous and open to interpretation as the information memorandum issued by Air Sahara’s advisors Ernst and Young is totally silent on that front.

Infact, sources close to Kingfisher Airlines, one of the most vocal bidder in the race, inform that, "The information memorandum issued to us does not state the percentage or the size of stake on offer and we infact have independently evaluated the entire enterprise and submitted the same to E&Y. Our valuation figure ofcourse is considerably lower than the one arrived at by E&Y." Echoing the same, SpiceJet director Ajay Singh, said, "Yes, the information memorandum issued by E&Y is extremely silent on the actual size of the stake on sale which very clearly suggests that the company is not just contemplating a minority stake sell but is actively open to a complete sellout of the entire enterprise."

Refuting the same, an official representing Air Sahara, said, "Talks of putting the entire enterprise on the block are all baseless." According to sources a total of ten suitors are in the race, where apart from the two private airlines, Kingfisher Airlines and Spice Jet, eight institutional investors led by Singapore-based Temasek Holdings, Blackstone Capital Partners and the Carlyle Group have put in their bids to acquire a strategic stake in Air Sahara.

Air Sahara on its part has kept "all options open", including selling equity or strategic partnership, to fund its expansion plans.