Sidus Pictures and Fun &Happiness, two of South Korea's most successful production companies, arepreparing to merge in an unexpected move that has set the local industrybuzzing.

Sidus Pictures, launched in1995 as Uno Films under CEO Tcha Seung-jai, is widely considered Korea'sstrongest production house, having released 31 features including ChristmasIn August (1998), Musa (2001), Volcano High (2001), Save The GreenPlanet (2003), Memories Of Murder (2003), and new release AntarcticJournal, which is predicted to top the local box office this weekend.

Fun & Happiness launchedin 1998 with the successful comedy Attack The Gas Station, and has produced 11films including No Blood No Tears (2001), Ardor (2002), Arahan (2003), andcurrent hit Blood Rain, which earlier this week was bought by Tartan for theUK. To date, CEO Kim Mi-hee has worked mostly in partnership withdistributor Cinema Service.

Following a board meeting onWednesday, Sidus Vice President Im Choong-yeol called the decision '99%confirmed,' with the merger to take place in June after a one-month graceperiod. The two companies are then scheduled to move into a newheadquarters in August.

The merged company, to benamed Sidus F&H, will wield unusual clout in an industry that has a limitednumber of established producers. Local press reports have noted that witha capacity to produce up to 8-9 films a year, the company would boast a lineupequal to that of a mid-sized distributor.

Sidus has in the recent pastworked through various distributors, including Showbox and CJ Entertainment.Should Sidus F&H decide to align itself with a major distributor, it wouldhave a tremendous effect on the local distribution market.

The two companies' mergerfollows a similar case last year, when Kang Jegyu Film and Myung Films joinedto form production/distribution outfit MK Pictures.