Biff Bangs

Financial terms of the deal, announced Friday, Jan. 13, call for Santa Monica, Calif.-based Lions Gate to fund the acquisition by using $55 million of its own cash, $45 million from proceeds from recently issued senior convertible notes due in 2017, $50 million in stock up front and another $20 million in either cash or stock at Lions Gates option within the next 60 days.

The remainder of the purchase price is going to funded through the assumption of Summits cash. A total of $343.5 million in cash was paid at the deals closing Friday, according to regulatory filings.

Summit, also of Santa Monica, could be entitled to up to another $7.5 million in cash, depending on the future financial performance of its Twilight film franchise, according to the filings. The film has so far grossed more than $2.5 billion at the box office globally.

This transaction continues Lions Gates long-term growth strategy of building a diversified worldwide media company through a combination of disciplined, accretive strategic acquisitions and organic growth while maintaining a solid balance sheet, said Lions Gate CEO Jon Feltheimer and vice chairman Michael Burns in a joint statement.

Twilight will be a healthy addition to Lions Gates film portfolio that features the Hunger Games, which will be released in March. On the television side, Lions Gate is best known for the Mad Men and Weeds series.

Lions Gate refinanced Summits current term loan with a $500 million credit facility that will be due in 2016. Lions Gate said it would likely pay off the debt before its maturity from the cash flow it is expecting to derive from Summit.

We believe that the combined entity will be even greater than the sum of its parts and our dramatically enlarged media platform will create tremendous opportunities for all of us within the Summit and Lions Gate families, said Summit co-chairmen and founders Rob Friedman and Patrick Wachsberger in a joint statement.

The New York Post reported Tuesday that Lions Gate hired an unnamed investment bank to shop TV Guide, which includes the branded television network and website, to private equity firms. The TV Guide magazine is owned by Open Gate Capital and would not be part of the process, according to the report.

Lions Gate acquired the TV network and website in 2009 from Macrovision Corp. for about $240 million.

JP Morgan Securities LLCs William Hageman, Barclays Capitals Alex Iosilevich and Craig Mineard of Jefferies amp; Co. were Lions Gates financial advisers. David Shapiro, David Alderstein, Nelson Fitts, Jeannemarie OBrien, Joshua Feltman and Joshua Holmes of Wachtell, Lipton, Rosen amp; Katz provided legal representation.

David Eisman and Brian McCarthy of Skadden, Arps, Slate, Meagher amp; Flom LLP along with Joshua Grode and Paul Swanson of Liner Grode Stein Yankelevitz Sunshine Regenstreif amp; Taylor LLP represented Summit.

Lions Gate shares were trading more than 4% higher, to $8.96, on Tuesday, with its market capitalization near $1.2 billion.

Lions Gate did not return calls. A Summit spokesman declined comment.

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