Toronto-based Lions Gate Entertainment Corp. said Oct. 18 it has acquired U.K. independent film distributor Redbus Group for $28 million in cash and $7 million in stock.

CANNES, France (The Hollywood Reporter) -- Toronto-based Lions Gate Entertainment Corp. said Oct. 18 it has acquired U.K. independent film distributor Redbus Group for $28 million in cash and $7 million in stock.

In addition to establishing a presence in the United Kingdom for its library of titles, Lions Gate has also acquired the Redbus catalog of more than 130 titles, including the U.K. indie's first major hit, "Bend It Like Beckham."

Lions Gate also has signed long-term contracts with Redbus co-founder and CEO Simon Franks, distribution president Zygi Kamasa and head of theatrical distribution Chris Bailey to run the day-to-day U.K. operation.

The two companies already have a strong relationship. Redbus recently distributed Lions Gate titles including "Open Water" and "Cabin Fever" and is set to release "Rize," "Hard Candy" and "Catacombs."

Redbus' upcoming U.K. release slate includes the Venice International Film Festival opener "Good Night, And Good Luck," "The Wicker Man," Bruce Beresford's "The Contract" and Michael Winterbottom's "Tristram Shandy: A Cock and Bull Story."

"This is about recapturing margin. Previously, we've had multiple distribution deals in place, where we go picture by picture. ... For example, they paid $500,000 for the rights of 'Open Water' in the U.K. and made $5 million on the picture," Lions Gate CEO Jon Feltheimer said in an interview. "Plus, the U.K. is a great growing market, Redbus has a great management team with good taste and there is business to be created there."

He added, "With the addition of our theatrical product, catalog and the other resources we will provide, we intend to mirror in the U.K. the successful growth strategy we have executed in North America."

Franks said in an interview that the deal appealed to him "not because of the money, it stopped being about the money some time ago, but because of the challenge it represents in being an opportunity to build one of the biggest players in the U.K."

Lions Gate, he added, would provide the skills and resources to do that. "Distribution in the U.K. is very difficult and this, pretty obviously, makes us much more powerful in the market," he said.

Lions Gate said it would continue to look to acquire additional international businesses and, at the start of 2006, would begin distributing a significant portion of its own library, including such titles as "Dirty Dancing" and "The Princess Bride."

Franks said no decision had been made on the future of Redbus' DVD distribution deal with Warner Home Video U.K., which handles most of its major sell-through releases. And Feltheimer said no decision has been made regarding the Redbus name. "They've got a pretty good brand there, so we're not sure if we'll change it."

Redbus, founded in 1998 by former JP Morgan and Banque Paribas investment banker Franks and Kamasa, was advised by Allen & Company LLC.

The announcement came as DVD-to-music distributor Image Entertainment said it has hired Salter Group to advise it on Lions Gate's recent unsolicited takeover bid. At the end of August, Lions Gate offered to buy Image in a swap of 0.38 to 0.42 shares of Lions Gate for each share of Image. Lions Gate already owns 19% of Image.

Lions Gate has been on the acquisition trail for some time. In May, it considered but then dropped a bid for British television production company HIT Entertainment Plc.

Nicole Sperling in Los Angeles contributed to this report.