Lionsgate buys Summit for $412.5 million

Summit's last 'Twilight' pic, 'Breaking Beginning -- Part 1,' made nearly $700 million worldwide.Lionsgate's 'Hunger Games' franchise is predicted to produce huge amounts of cash for your minimajor.Summit Entertainment and Lionsgate have made the decision just to walk lower the aisle, mixing the town's leading minimajors in the complex cash and stock deal worth $412.5 million. The completed deal, that's been prone to close in the last week, has been around since the close in the market Friday. Lionsgate co-chairman and Boss Jon Feltheimer and vice chairman Michael Burns told Variety that final particulars were worked out at 3 a.m. PST on Friday. The sale is structured just like a utilized buyout with many different the price funded with cash on the quantity sheet at Summit. "This transaction continues Lionsgate's extended-term growth way of developing a varied worldwide media company through a mixture of disciplined, accretive proper purchases and organic growth and keep a great balance sheet," mentioned Feltheimer and Burns in the joint statement. "We are joining together two effective entertainment brands, getting together two world-class feature film franchises to find out a commanding position inside the youthful adult market, strengthening our global distribution infrastructure and creating a scalable platform that can result in significant and accretive financial advantages to Lionsgate traders." The Lionsgate board approved the sale Tuesday, according to Feltheimer. Summit co-chairmen Make the most of Friedman and Patrick Wachsberger mentioned in the statement, "We're feeling the combined entity will probably be much more than the sum its parts." The announcement mentioned both Lionsgate and Summit continues for distinct brands -- both "confused being produced and distribution of films." However it did not directly address the status of Friedman and Wachsberger. Speculation regarding future has varied broadly, different within the two while using reins of Lionsgate's movie methods from current topper Joe Drake to Freidman and Wachsberger departing the combined company. Friedman and Wachsberger met with Summit staff Friday mid-day following a announcement to brief them round the deal and stress they ought to focus on the ongoing business. "We stated thirstily that people will probably continue to handle their business since there is available a lot of films coming," Friedman mentioned. "We'll still operate Summit daily and employ Lionsgate around the seamless transition. We are not implementing our ft in the pedal." Feltheimer told Variety he needs specifics on management structure being revealed next week. The announcement also didn't address the issue of whether you will notice lay offs but Feltheimer mentioned, "There's without doubt that you'll see some consolidation but also for many employees, this can be a significant chance." The merger will substantially strengthen Lionsgate's foreign sales methods. Wachsberger mentioned he needs Summit's foreign sales division being opeating of course within the approaching Berlin and Cannes film areas. Though Lionsgate relies in Vancouver, nearly all its methods will be in Santa Monica, a few blocks within the Summit offices. Summit has about 150 employees, Lionsgate about 500. Wachsberger established that there are many familiarity involving the two companies. "Individuals at Summit be familiar with people at Lionsgate," Wachsberger noted. Lionsgate mentioned transaction is predicted being "substantially accretive" in Lionsgate's 2013 fiscal year beginning April 1. Beyond the Summit cash, the comfort in the transaction was funded with $55 million of existing Lionsgate cash, $45 million of cash received in the lately launched quantity of Lionsgate convertible notes, $50 million of Lionsgate common stock plus an additional $20 million of cash or stock being launched at Lionsgate's option within two several weeks. Summit's existing term loan was refinanced getting a $500 million debt facility, guaranteed with the collateral in the Summit assets. The lent funds matures in 2016 but Lionsgate mentioned it "anticipates having to pay back the lent funds just before the maturity date, due to the running earnings the organization is predicted to produce.In . Burns and Friendman both told Variety the fourth and fifth "Twilight" films as well as the "Hunger Games" films are expected to create huge amounts of cash to cover lower that loan right before 2016. The little-majors are actually settling exclusively with each other in recent days as professionals sorted using the complexity in the transaction. Miramax owner Colony Capital designed a deal combined with experienced discussions throughout November and December before losing out. The merged entity may have more firepower in the market where the majors have scaly back on mid-budget films for tentpoles and franchises -- creating an opportunity for substantial indies to fill that gap. The union brings the "Twilight" franchise beneath the same roof as "The Hunger Games," which Lionsgate is banking onto revitalize its film slate. All the the "Twilight" photos, "The Twilight Saga: Breaking Beginning -- Part 2," due to open November. 16, will most likely take because $1 billion within the worldwide box office. The initial installment from the products Lionsgate hopes is really a franchise using the popular book series, "Hunger Games" opens March 23. A clip for your pic got a good start having its target aud in running with Summit's "Twilight Saga: Breaking Beginning -- Part 1," which did boffo business following its November. 20 domestic bow. Since 2007, Summit co-chairs Friedman and Wachsberger have transformed Summit in the foreign sales company in to a full-service production and distribution studio around the rear of their effective gamble on film adaptations of Stephenie Meyer's best-selling quantity of vampire-werewolf books. In April 2007, Summit arranged a $1 billion financing deal -- a transaction that won't happen to be possible a few several days later because real estate marketplaces began melting lower. Last March, Summit closed a $750 million financing deal -- a $550 million term loan together with a $200 million turning line of credit -- that allowed the business to unshackle itself from numerous its debt, increase feature production and fund day-to-day methods. Furthermore, it paid out a cash distribution towards the greatest traders, including Friedman, Wachsberger, Participant Media, Nala Films and equity fund Rizvi Traverse Management. Lionsgate and Summit have observed discussions of a union coming back to date as fall 2008, before the bow in the first "Twilight" pic. People discussions began again last fall inside the wake of Lionsgate's settlement with longtime foe Carl Icahn that the billionaire made the decision to market this stake finish his three-year mission Lionsgate shares appreciated by 28% this season and possess acquired another 3% this year. Summit's technique is to produce and distribute 10-12 films every year, getting a focus on the midrange films the majors are more unlikely to greenlight. Aside from "Twilight," Summit's bread and butter has remains broad-based fare at moderate prices with identifiable stars for instance "Red-colored-colored," "Source Code" and 2 thrillers now in publish-production: "Guy around the Ledge" with Mike Worthington and "Cold Light of Day" with Henry Cavill, Sigourney Weaver and Bruce Willis. Approaching photos include dance pic "Step-up 4" and vampire romancer "Warm Physiques." Besides the fourth "Twilight," "Source Code" and 'The Beaver," Summit's 2011 release slate incorporated "The Pitch-dark Hour", "50/50" and Chris Weitz' drama about Mexican immigrants in La, "A Far Greater Existence." A "Red-colored-colored" follow-up remains dated for next season but Summit hasn't locked lower a director. Summit's been trying to make a "Highlander" reboot. Summit also acquired a bit of the stunner couple of years ago with Oscar-champion "The Hurt Locker" -- the least expensive grosser connected having a Oscar Best Picture champion. Unlike Summit, Lionsgate also provides a considerable TV production-distribution operation that's where you can series including AMC's "Mad Males," Showtime's "Weeds" and "Nurse Jackie," "Boss" on Starz as well as the approaching Charlie Sheen sitcom "Anger Management" on Foreign exchange. Its Debmar-Mercury distribution operation includes "Tyler Perry's House of Payne" and "The Wendy Williams Show." Lionsgate is ongoing to develop through purchases throughout yesteryear dozen years under Feltheimer and Burns. The duo have orchestrated the purchases of film and video libraries including Trimark in 2000, Artisan in 2003, Redbus in 2005, Debmar-Mercury in 2006, Mandate in 2007 and tv Guide Network this past year, additionally to some stake in distrib Kerbside Sights in 2007. No matter your dream with Icahn, Lionsgate ongoing to become a dynamic bidder for MGM this past year and 2010 just before the Lion experienced its pre-packed personal personal bankruptcy in the finish of 2010 in the deal that left Spyglass cake cake toppers Roger Birnbaum and Gary Barber in charge. Lionsgate introduced in November it had lost $24.6 000 0000 within the second quarter ended Sept. 30 due partly to disappointing perfs from "Conan the Barbarian," "Warrior" and "Abduction." Lionsgate'a balance sheet had $590 million with debt by Sept. 30. It comes down to 13,000 game game titles within the film and tv library. JP Morgan, Barclays Capital, and Jefferies offered as joint lead arrangers and joint bookrunners on financing the acquisition for Lionsgate with JP Morgan, Barclays Capital and Jefferies also becoming finance experts. Barclays Capital provided a justness opinion to Lionsgate. Wachtell, Lipton, Rosen & Katz offered as outdoors an attorney for Lionsgate. Lining Grode Stein LLP and Skadden, Arps, Slate, Meagher & Flom LLP offered as outdoors an attorney for Summit. Contact Dork McNary at dork.mcnary@variety.com