Two of Hollywood's leading independent studios, Lionsgate and Summit, have started merger discussions, according to an individual with knowledge of the talks.
Summit is fresh off the success of its second-to-last Twilight installment, which has already taken in $488 million worldwide in two weeks. And Lionsgate is ramping up for a new blockbuster series, The Hunger Games, after coming off a weak quarter with three movie flops in a row.
An individual close to Summit said other suitors may be in the mix to merge with the independent studio.
Many in Hollywood say that a merger is long overdue.
Lionsgate has only just recovered from a wearing boardroom battle with corporate raider Carl Icahn. That the company emerged intact from that bullfight was a testament to CEO Jon Feltheimer's skill maneuvering on Wall Street, but it also exposed the company's very real vulnerabilities.
And as Summit faces the twilight of its blockbuster Twilight series, the studio will face the vagaries of movie slates without the benefit of a library to support its operating costs.
The studios have been in talks before. In the past negotiations that have broken down over price and control issues, which some have interpreted as the lack of desire by Summit chief Rob Friedman to report to Feltheimer.
Bloomberg first reported the renewed discussions.
A representative for Summit declined comment. Lionsgate similarly declined to comment.
Lionsgate, with a $1 billion market cap, could do an equity swap with Summit, whose finances are private. Summit raised $750 million earlier this year to finance movies and pay back its investors including Rizvi Traverse Management. The financing included $550 million in secured notes and a $200 million revolving credit facility.
One knowledgeable insider suggested several weeks ago that Summit may be worth about $250 million. But Summit believes it is worth at least $1 billion, according to another knowledgeable insider.