Australian distributor Pinefilm Entertainment is in the final stages of negotiations to merge with an unnamed public company, in a move that will provide it with considerable new cash resources for film acquisitions.

Pinefilm managing director Sean Rothsey confirmed the talks but said a non-disclosure agreement prevents him from naming the company, which is currently not involved in entertainment.

The Rothsey Family Trust, through an intermediary, will become the largest single shareholder in Pinefilm and have controlling voting rights of the joint entity, which will take the Pinefilm name.

Pinefilm's parent company has been divesting itself of many non-core businesses over the last year to concentrate on film and entertainment. Rothsey claims to have also negotiated enough institutional, investor and other types of finance to give Pinefilm Entertainment a $29m (A$55m) budget over the next few years.

The company plans to make several new appointments before year end and separate arthouse and mainstream divisions will be formed. Pinefilm's existing partners, theatrical distributors The Becker Group in Australia and Rialto in New Zealand, and video distributor Siren Entertainment, will remain in place.

It is understood that Rothsey is in negotiation to buy various libraries, to jointly manage Australian screens, and to acquire Australian rights to Terminator 3, although this is unconfirmed.

Rothsey entered the film distribution business in early 1998 when he became the financial backer behind the Globe Film Co's acquisitions. About a year later he and Peter Downer, formerly one of three partners in Globe, took over the films directly under the Pinefilm banner. In June this year they parted company and Nicole Sorby was appointed head of acquisitions.