DreamWorks aims to raise £356m

DREAMWORKS, the film studio behind the billion-pound Shrek franchise, plans to spin off and float its loss-making animation division as it attempts to ramp up production. The film studio - launched 10 years ago by Steven Spielberg, Jeffrey Katzenberg and David Geffen - said in a filing with the US Securities and Exchange Commission that it plans to raise $650m (£356m) through an initial public offering (IPO) of its shares.

It is the latest move to restructure the DreamWorks business following the sale of its music division and its decision to abandon its video game and internet ventures.

DreamWorks did not mention the expected pricing or timing of the IPO.

But it revealed that the animation division had lost more than $350m (£191.7m) over the past five years.

Last year alone the animation division lost $189m (£103.5m) on $296m (£162m) in revenue.

Analysts suggested management could sell up to 25% of the company's shares which would give the spin-off business an implied value of between $2.6bn (£1.4bn) and $3.25bn (£1.78bn).

DreamWorks plans to use $175m (£95.8m) of the funds raised as working capital with the rest to pay off debt.

The new company, to be called DreamWorks Animation, plans to pump out at least two computer-animated films a year and needs the extra capital to fend off stiff competition from arch-rival Pixar, which created the smash hit Finding Nemo.