January 13, 2012
Lionsgate has purchased Summit for $412.5 million, the companies announced on Friday.
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.
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 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.
The deal places a question mark over the future of production chief Joe Drake. It also means one less buyer in an already reduced indie landscape — and layoffs at the two companies.
Lionsgate will get a modest library of titles that also includes “The Hurt Locker” and “R.E.D.,” which it can add to its paid TV network Epix. Perhaps more important, Lionsgate will gain Summit’s expertise in international distribution — an area where it is lacking.
However, insiders at both studios feel that Summit’s experience in transforming the vampire “Twilight” series into a global box office phenomenon can help Lionsgate pull off a similar feat with “The Hunger Games.” This could help turn the studio, a launching pad for mid-budget genre films, into a lekking ground for young adult film franchises.