Children's animation producer-distributor BKN International (BKNI) has sold in principle a 3.8% stake to Sony Pictures Family Entertainment as the German company gears up for expansion in the US and Asia.

The sale follows BKNI's acquisition of a programme library and Los Angeles production studios for $28m from BKN, effectively marking the end of the business relationship between the two operations. As part of the acquisition, BKNI has purchased the BKN trademark. BKN Inc will change its name and become a holding company without operational assets

As well as accelerating BKNI's overseas expansion, the Sony stake cements a broad alliance that will include the joint development of productions. Sony agreed in principle to acquire warrants allowing it to buy BKNI shares in at Euros45 each. Sony's Sander Schwartz is to be nominated to the BKNI supervisory board.

BKNI now owns the fifth largest animation library in the US and distribution rights to several Sony animated series such as Jumanji, Starship Troopers and the upcoming Heavy Gear. The Cologne-based concern, which has been listed on Frankfurt's Neuer Markt since March 2000, aims to have a production presence in Japan by the end of this year or the start of 2002.