Lions Gate Entertainment is expected to close a deal to acquire Artisan Entertainment this week, according to Canadian and US press reports.
The deal is reported to be worth $165m in cash, with Lions Gate also taking on more than $50m in debt from Artisan.
According to the New York Post, The Lions Gate bid was reported to have beaten off a rival, lower offer by a team led by former USA Films Chairman Scott Greenstein and Boston-based buyout firm Thomas H. Lee Co.
Lions Gate, a publicly traded company whose credits include Monsters Ball, plans to finance its bid with proceeds from a recent stock offering, which is expected to raise $67.5 million, and debt financing from JPMorgan Chase.
For Lions Gate, acquiring the much larger Artisan, would help it increase its market share, as well as help achieve overhead reductions and other operating synergies.
Artisan has had trouble matching the early, phenomenal success of The Blair Witch Project, but has an extensive library of films - which includes Dirty Dancing, Terminator 2 and The Piano - and a strong video operation. Forthcoming films Dirty Dancing: Havana Nights.
Canadian newspaper The Post reported that such a deal could have implications for Alliance Atlantis Communications, which spun off its Movie Distribution Income Fund last week.
Artisan is among a handful of Canadian distribution deals upon which the Alliance's 57-per-cent-owned income fund relies for its cash flow stream to pay unit holders.
Artisan signed a Canadian distribution deal with Alliance this summer that carries through until March 31, 2007.
National Bank Financial analyst Adam Shine said the contract would be as good as gone after that point if Lions Gate, which has its own distribution arm, is successful in picking up Artisan.