Ed Pressman and JohnSchimidt's three year-old ContentFilm has completed a reverse merger with theAIM-listed UK film outfit Winchester Entertainment which gives the US companymajority ownership and operational control of the UK production and distributionand international sales operation.

Pressman and Schmidt will bejoint CEOs of the combined company, while Jamie Carmichael, who runsContentFilm's London-based sales operation Content International, will be incharge of the consolidated sales companies.

The reverse merger wherebythe acquired company emerges as majority shareholder took the form of a stockswap, meaning that existing ContentFilm shareholders now have 50.1% of the newcompany and Winchester shareholders hold 49.9%.

"The reality of the deal isthat we will raise additional capital and look to expand through furtheracquisitions," explained ContentFilm co-CEO Schmidt on Friday. "Under the newcompany ContentFilm Plc, we will consolidate the film libraries, internationalsales companies and production efforts while keeping the UK distributioncompany."

Winchester had itself mergedwith Cobalt Media earlier in the year, although the merger led to the departureof Winchester chief executive Gary Smith last month and ongoing financialdifficulties. Alton Irby and John Muse, who were partners in Cobalt, willremain involved with ContentFilm and plan to invest additional capital into thenew company. Their investment sits alongside the backing in ContentFilm ofSyntek Capital, a private equity firm whose advisors include Michael Dornemann(former Bertelsmann CEO) and Letizia Moratti (former News Corp Europechairman).

"With Alton and John, SyntekCapital and Frank Biondi [former CEO of Universal Studios and anotherContentFilm investor] as some of the investors, we will have a powerful andconnected shareholder group," said Schmidt and Pressman.

The merger will create theUK's largest publicly listed film company and gives Pressman and Schmidt accessto UK tax breaks for their films and the opportunity to reconfigure someprojects as UK productions. Pressman cites Nightfall which ContentFilm has been developing with UKdirector Jeff Stark (the celebrated short Desserts) and The Film Council as a prime example.

Meanwhile former Cobaltpartner and film finance veteran Rodney Payne will remain with ContentFilmraising production capital and putting finance structures in place for both UKand US production.

Mick Southworth willcontinue to run ContentFilm's UK distribution arm which, says Schmidt, "can alsoproduce certain benefits in regards to financial and UK film subsidies." AsWinchester, Southworth released films such as Lantana, Baise-Moi and was negotiating to take out Cobalt's OpenRange in the UK.

Carmichael will be in chargeof the international sales operation; Ralpho Borgos was named chief ofinternational distribution at MIFED, but his position is now uncertain, as isthe position of former Winchester sales chief Billy Hurman.

It is also unclear how DamonBryant, the producer who recently joined Winchester as production chief, willfit in with Pressman's New York and LA production teams.

The merger was initiatedwhen the two companies met to discuss working together in international sales."Meetings evolved from there on the relative positions of both companies,"explained Schmidt. "We thought that putting that critical mass in our handswould be beneficial to both of us."

ContentFilm's film creditsin the last two years include The Cooler, Party Monster, The Guys and the upcoming Undertow directed by David Gordon Green and Beautiful Countrydirected by Hans Petter Moland.

"It gives us a globalfootprint," said Pressman, whose illustrious career includes films with OliverStone, Barbet Schroeder, Brian De Palma, Terrence Malick, Fred Schepisi, JohnMilius, Kathryn Bigelow, David Mamet, John Frankenheimer, James Toback and AbelFerrara. "We've always been internationally minded and this gives us a greatway to go further in that direction."

The press statement went togreat pains to stress that the merger would be of value to the UK industry.Quoting "a person close to the deal", the statement said that the deal wouldbring "some of the brightest management in the US film industry to London, andhave some of the savviest backers in the business." It concluded byproclaiming: "This is a very exciting development for the UK industry."