MUMBAI: In a move that unites two of Hollywood’s largest independent studio, Lions Gate Entertainment Corp. has acquired Summit Entertainment LLC for $412.5 million in cash and stock.

The agreement gives Lions Gate library rights to the first 14 vampire films in the Twilight series.

Said Lions Gate Vice Chairman Michael Burns in a statement, “We think it solidly positions us. It extends our reach dramatically. It increases the size of the library.”

While some believe that income from ticket sales, home videos and TV rights may generate as much as $1 billion in free cash flow all through this year, some others believe that the transaction is a net positive for all parties, but consolidation in the sector is reflective of the significant challenges in the industry.

Most of the purchase was funded with cash from Summit, Lions Gate said yesterday in a statement. The announced terms suggest Lions Gate used about $240 million in cash from Summit.

The balance was financed with $55 million of Lions Gate cash, $45 million from new Lions Gate convertible notes, $50 million of Lions Gate common stock and an added $20 million of cash or stock to be issued at Lions Gate’s option within 60 days, according to a statement.

Both film labels that operate from Santa Monica, California will remain active producers.

Details of the agreement are being worked out.