The biggest open secret in Hollywood was made public on Friday (13) in a same-day sign-and-close transaction that creates an independent behemoth but leaves questions unanswered.

The deal for $412.5m in equity and approximately $300m in assumed debt brings together the owners of the Twilight series and the eagerly awaited franchise-elect The Hunger Games with the possibility of further exploitation of the imported Summit properties across Lionsgate’s television platform.

For now, the two companies will operate their production and distribution businesses side-by-side, although clear inefficiencies in such a practice would suggest that consolidation is inevitable with significant job losses to come. Summit is set to begin production imminently on Now You See Me and will release Man On A Ledge on Jan 27.

However the exact form of a management restructure remains to be seen. Intriguingly, sources said neither Summit co-chairmen Patrick Wachsberger (pictured) and Rob Friedman had signed employment contracts at time of writing.

The vastly experienced pair, riding high on the huge success of the Twilight series even though sustainable success on the overall domestic distribution slate has been elusive, would appear to be the likeliest candidates to head the combined entity’s domestic and international film operation if their ambitions do not take them elsewhere.

Received wisdom suggests that Lionsgate’s motion picture film group president Joe Drake would leave the company after the release in March of The Hunger Games.

Drake is a close ally of the company’s international sales chief Helen Lee Kim, who was understood to be taking filmmaker meetings as usual to bolster the sales slate in advance of next month’s EFM in Berlin. Similarly Wachsberger and his sales team at Summit International are expected to make the trip to Germany.

For now it would appear to be business as usual heading into Sundance, too. Lionsgate and Summit will dispatch separate acquisitions teams to Park City next week with orders not to bid against each other.

The deal points of the acquisition are outlined below in Friday’s press release:

“The majority of the purchase price was funded with cash on the balance sheet at Summit. The remainder was funded with $55 million of existing Lionsgate cash, $45 million of cash received from a newly issued series of Lionsgate convertible notes, $50 million of Lionsgate common stock and an additional $20 million of cash or stock to be issued at Lionsgate’s option within 60 days. At closing, Summit’s existing term loan was refinanced with a $500 million debt facility, secured by the collateral of the Summit assets. Although the term loan matures in 2016, the Company anticipates repaying the loan well before the maturity date, due to the significant cash flow the business is expected to generate. In addition, this expected cash flow will facilitate the Company’s financial
objective of further deleveraging Lionsgate’s balance sheet. The transaction is expected to be significantly accretive in Lionsgate’s 2013 fiscal year beginning April 1, 2012.”

JP Morgan, Barclays Capital, and Jefferies served as joint lead arrangers and joint bookrunners on financing the acquisition for Lionsgate. JP Morgan, Barclays Capital, and Jefferies also served as financial advisors to the Company. Barclays Capital provided a fairness opinion to Lionsgate. Wachtell, Lipton, Rosen & Katz served as outside legal counsel for Lionsgate. Liner Grode Stein LLP and Skadden, Arps, Slate, Meagher & Flom LLP served as outside legal counsel for Summit.