Bloomberg News

Summit Suitor Lions Gate Would Limit Debt, Stock in Any Deals

December 09, 2011

Dec. 7 (Bloomberg) -- Lions Gate Entertainment Corp., in talks to combine with “Twilight” producer Summit Entertainment LLC, would limit stock and debt issuance in any deal, Vice Chairman Michael Burns said.

Lions Gate, distributor of the Tyler Perry comedies, plans to reduce debt levels over the next two years, Burns said today at the UBS Media & Communications Conference in New York. The company’s goal is for acquisitions to boost earnings, he said.

The aim for deals that boost profit suggests the company won’t overpay. Three people with knowledge of the situation confirmed last month that Lions Gate wants to combine with Summit. Colony Capital, owner of the Miramax film library, also held talks with Summit, people have said. Burns, discussing the company’s general approach to acquisitions, didn’t say Lions Gate is in talks with Summit.

“We wouldn’t put on a lot of debt in any acquisition that we did,” Burns said yesterday on CNBC. “And we wouldn’t issue a bunch of stock.”

Lions Gate and Summit resumed talks that broke down in the past over price and control issues, the people said. The first four “Twilight” films, based on the Stephenie Meyer’s teen vampire romance novels, have generated $2.39 billion in worldwide ticket sales, according to Box Office Mojo. The last installment is set for release in November.

“Twilight” fits the Lions Gate strategy of pursuing the teen audience. The studio will release the first of four planned films based on Suzanne Collins’s “Hunger Games” trilogy in March. The studio also owns rights to the “Chaos Walking” young-adult books by Patrick Ness.

Lions Gate, run from Santa Monica, California, gained 2.4 percent to $8.85 at the close in New York. The company has about $550 million in short- and long-term debt, according to data compiled by Bloomberg.

Closely held Summit, also in Santa Monica, raised $550 million in March with a 5.5-year loan to finance a dividend and film production.

--Editor: Rob Golum

To contact the reporters on this story: Michael White in Los Angeles at mwhite8@bloomberg.net; Alex Sherman in New York at asherman6@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net


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