The two independent studios have been circling each other for months. The deal is being structured as a leveraged buyout, in the form of cash and stock.
"We are uniting two powerful entertainment brands, bringing together two world-class feature film franchises to establish a commanding position in the young adult market, strengthening our global distribution infrastructure and creating a scalable platform that will result in significant and accretive financial benefits to Lionsgate shareholders," Lionsgate Co-Chairman and Chief Executive Officer Jon Feltheimer and Vice Chairman Michael Burns said in a statement.
"Rob Friedman and Patrick Wachsberger have built a remarkable organization, and we're pleased to welcome Summit's talented team to the Lionsgate family," the pair added.
Colony Capital had also been pursuing Summit, but dropped out a few weeks ago, according to an individual with knowledge of the negotiations.
Summit brings with it debt, but that will be paid off with profits from the final two “Twilight” movies, allowing Lionsgate to keep that sum off its own books.
The remainder was funded with $55 million of cash from Lionsgate, $45 million of cash received from a newly issued series of Lionsgate convertible notes, $50 million of Lionsgate common stock and an additional $20 million of cash or stock will be optioned by Lionsgate within 60 days.
The stock will amount to roughly 4 percent of Lionsgate's shares.
The debt that Summit took on last spring, has been refinanced into a new $500 million loan, which will be paid off by 2016. Lionsgate said it anticipates retiring the debt before that date.
Summit co-chairs Rob Friedman and Patrick Wachsberger will likely oversee Lionsgate’s film division, but no contract has been signed, according to individuals with knowledge of the situation. If a deal is completed, Friedman would likely oversee domestic operations for the merged companies' film operations and Wachsberger would handle the international end.
An announcement on the new management team is expected in the next few weeks, according to an individual with knowledge of the matter.
Read the rest of this article at thewrap.com
~Robstenfan
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