Pinewood-Shepperton Holdings, owner of the $145m (£100m)-plus super studio formed this week from Pinewood Studios' effective takeover of Shepperton Studios, has set its sights on a link-up with a production facility on the European Continent.

Michael Grade, the former Pinewood chief who becomes executive chairman of the new group, confirmed that a European partnership was high on the company's agenda. He said that several leading operations were being considered.

"We are looking for any opportunity to grow this business," he added.

The expansion comes as German facilities giant Das Werk is rapidly building up a global network including Spain's En Efecto and 42nd Street Productions, Germany's Road Movies, LA-based Centropolis Effects and the US' Promark Entertainment Group. Pinewood Studios this year made its first move into production and rights ownership by taking a majority share in children's TV producer Silver Lining.

The Pinewood-Shepperton deal was underwritten by 3i, the UK venture capitalist group which financed Grade's $97m (£67m) takeover of Pinewood from the Rank Group in February 2000. 3i is understood to have committed more than $43m (£30m) towards the deal and will see its stake in the new-look company increase to more than 60%. The merger received clearance from the Office of Fair Trading last year.

Grade, formerly head of Channel 4, pointed out the two studios lost Harry Potter And The Philosopher's Stone to UK rival Leavesden when, individually, they did not have enough sound stages to accommodate the $130m (£90m) adaptation. "The two studios have been competing for years against each other," he said. "In an increasingly global market, this makes no sense. Together, we can enhance Britain's share of the international movie making business."

The two studios, which between them employ around 260 people, will continue to retain their individual trading identities, although they will be under common ownership and management. Pinewood's Ivan Dunleavy, who becomes chief executive of the new group, said that the studios have a common customer base, principally the US majors and UK film and TV producers.

"By combining the booking of all the stages and support facilities, we will be able to accommodate more productions overall," he said.

Directors Ridley and Tony Scott, who along with Candover led the investor group which acquired Shepperton in January 1995 as Shepperton Holdings, will remain shareholders in the enlarged group and continue as co-chairmen. "Tony and I are committed to the growth and continued success of these historic studios," Ridley Scott said.

The film-making brothers will also act as co-chairmen of The Mill, the post production house behind Ridley Scott's Gladiator which was this week bought out by its management with backing from 3i. The Mill's original founders, James Morris, Robin Shenfield and Pat Joseph, will run the operation after Candover sold its interest for more than $14.5m (£10m) as part of a $35m (£24m) buy-out.

Mill Film, the film division of The Mill, struggled to break even last year after what Shenfield called "an aggressive and large-scale start-up" in 1997. 3i will treat the post house as a separate investment in its media portfolio to the bricks and mortar studios. Royal Bank of Scotland also funded the buy-out

Pinewood, founded in 1936 by J Arthur Rank, is best known for housing the Bond films and was the location for filming of Tomb Raider. Shepperton, established in 1928, has credits including 102 Dalmations, The Mummy Returns and Shakespeare In Love.