In a move that diversifies its product line and geographic trade area,
Entertainment One, which owns Koch Entertainment, has agreed to acquire U.K.-based Contender Entertainment Group for £49.4 million ($97.3 million).

Contender Entertainment Group acquires film and other content for distribution to cinemas and to issue and distribute DVD to stores in the U.K. It also has its own in-house team creating children's content for its Rubber Duck Entertainment label.

If the deal closes, management foresees the possibility of selling Contender content in North America. Also, Contender One's content will bolster Entertainment One's offering in Canada, where it is a distributor of DVDs.

Entertainment One, which was acquired by Marwyn Investment Management LLP in February, will pay £42 million ($82.7 million) in cash and issue 7.4 million ordinary shares to Contender. It is funding the deal through issuing 20.2 million ordinary shares, which will net £21.7 million ($42.7 million), and it will draw down £20 million ($39.4) from a credit facility supplied by Barclays Bank.

In the year ended March 31, 2007, Contender generated un-audited revenue of £25.1 million ($49.5 million) and normalised EBITDA of £6.3 million ($12.4 million).

Entertainment One shares closed up 10 pence at £1.105 on news of the trading today (June 14).