Studio in final talks to acquire unit

Looking to extend its recent dealmaking streak, Lionsgate is in final talks to acquire Mandate Pictures in a deal pegged at north of $40 million.

Neither company would address a report on the takeover in Friday’s L.A. Times.People familiar with the discussions said the deal was likely, though not 100% certain. Should it close, Mandate would likely retain a large degree of autonomy — an important ingredient for the company given how many projects it has set up at various studios.

Mandate CEO Joe Drake would run Lionsgate’s film operations while continuing to steer Mandate. Lionsgate would participate in sequels to certain Mandate properties as well as pay TV and homevid revenues.

Known for producing Sony releases such as the “Grudge” pics and “Stranger Than Fiction,” Mandate also does business with Sam Raimi through the helmer’s Ghost House genre label. The company was formerly the U.S. operation of German film heavyweight Senator Entertainment before a management buyout and rebranding took effect in early 2005.

For Lionsgate, which announced soft quarterly earnings on Thursday, the deal would continue a busy 2007. While its last several releases have failed to connect at the B.O., it has taken large stakes in Break.com and arthouse distrib Roadside Attractions while also sewing up financing deals through Goldman Sachs and the government of Quebec.

Execs assert that the company’s cash and borrowing capability now totals $1 billion.

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