Merger in place for Lions Gate and Summit Entertainment

Merger in place for Lions Gate and Summit Entertainment

To enhance their spending power, renowned Production house, Lions Gate is in merger talks with Summit Entertainment. The talks first initialized way back in 2008, but no deal was finalized.

A year later, reports again surfaced that the two companies will join hand which will include Lions Gate acquiring rights to all Summit movies, but despite all the speculations, the news was put to rest after talks broke down due to un known differences.

Now, it seems that the merger talks are finally on track, and if the deal is finalized it will allow Lions Gate to acquire one of the biggest coups in recent times. The one thing going for Summit has been their young adult sequel, Twilight which has grossed
over 1 billion US dollar.

Their latest installment, Breaking Dawn Part 1 has already emerged as the biggest hit at the box office, taking the top spot with estimated figures of over 40 million. With Part 2 in the pipeline for a next year release, the merger will mean a lot to Lions
Gate, with a definite package which ensures much needed cash injection to their other projects.

For Lions Gate, they currently rely heavily on The Hunger Games, which is slated for a March release next year. In order to make a sequel they will have to earn a minimum of 100 million from the Box Office.

The two companies have been enduring similar fate in terms of mounting debt but with Twilight being the front runner for most movie goers; it has allowed Summit to repay their debts in excess of 750 million while also paying dividends to their share holders.

As for Lions Gate they have a mounting debt situation of around 550 million dollars so a merger will allow them a little stability for some of their high-profile endeavors. However, the main issue now arises with the shift in powers as both companies are
reluctant to make compromise over price and management control.

For now, the Twilight Saga is certainly earning bigger pay days for Summit entertainment.

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Posted by Zubair Saleem on Nov 29 2011. Filed under Entertainment. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry