Merchant Ivory Productions (MIP) has joined with Iceland's Pegasus Pictures to co-produce an adaptation of Nobel Prize-winning novel Independent People which Hector Babenco will direct from a script by long-time MIP collaborator Ruth Prawer Jhabvala.

Icelandic producer Snorri Thorisson beat off stiff competition, both local and international, to option rights to Halldor Laxness' 1930s novel which has appeared on best seller lists around the world. Leonard Shrader, who co-wrote Babenco's Kiss Of The Spider Woman, was originally set to adapt the novel but quit the project for personal reasons, forcing Babenco and Thorisson to look for another writer.

Thorisson met with producer Ismail Merchant and Jhabvala at this year's Cannes but said: "the deal was only signed last week in New York when we all had time to get together with Hector and get it on paper."

Jhabvala will start working on the English-language script immediately in close collaboration with Babenco. Talks on casting and locations for the $12-20m project are already under way.

Other projects on Pegasus' internationally focussed production slate include My Brother and East Of The Moon, which will feature a US, Canadian and Icelandic cast. The latter, to be co-produced with Canada's ImX Communications, is set to shoot next year.