Italo film company Medusa and Canadian distributor Alliance Films have forged a strategic pact to jointly acquire and co-produce movies, boosting their leverage in the international arena.

Under the agreement, inked by Alliance chairman Victor Loewy and Medusa managing director Giampaolo Letta, the companies will have a common product pipeline, buying movies in tandem, with the heft that comes from multi-territory deals. They will also collaborate on co-productions.

Alliance will release pics in Canada and also in the U.K. and Spain via its Momentum Pictures and Aurum Prods. subsidiaries. Medusa will distribute in Italy, where it is a partner in the largest exhibition chain, The Space Cinema.

For the Italo industry, the pact is the strongest transcontinental partnership in recent memory.

Alliance has had a rapport with Italy’s Eagle Pictures, a smaller player than Medusa.

The deal was negotiated by Loewy and Alliance prexy Charles Layton, for Alliance, with Medusa chief of acquisitions Faruk Alatan.

Medusa, a unit of Prime Minister Silvio Berlusconi’s broadcast group Mediaset, has become more active in international co-productions, recently boarding Sofia Coppola’s “Somewhere” and Paolo Sorrentino’s Sean Penn starrer “This Must Be the Place.”

Alliance Films has exclusive deals with Focus Features, Relativity Media, CBS Films and The Weinstein Co.