CANNES (Hollywood Reporter) - Toronto-based Lions Gate Entertainment Corp. said Tuesday it has acquired independent film distributor Redbus Group for $28 million (16 million pounds) in cash and $7 million in stock.

In addition to establishing a presence in the U.K for its library of titles, the deal gives Lion Gate the Redbus catalogue 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 this year's Venice International Film Festival opener, "Good Night, And Good Luck", Neil LaBute's "The Wicker Man", Bruce Beresford's "The Contract" and Michael Winterbottom's "Tristam 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 out theatrical product, catalogue 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."

OPPORTUNITY TO BUILD

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 see international businesses to acquire 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 make 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 JPMorgan and Banque Paribas investment banker Simon Franks and partner Zygi Kamasa, was advised by Allen & Company LLC. The announcement came as DVD-to-music distributor Image Entertainment said it has hired Salter Group top 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 percent of Image.

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