After fifteen years as a major local player, Italy’s top film outfit, Medusa, is looking to break out of the boot.

The company has already ramped up co-productions, boarding Sofia Coppola’s “Somewhere” alongside Focus Features and, more recently, Paolo Sorrentino’s Sean Penn starrer “This Must Be the Place,” with Pathe, among other partners.

A recent pact with Canada’s Alliance Films will further expand horizons for the Italo film industry, says Medusa managing director Giampaolo Letta. Medusa and Alliance will jointly acquire and co-produce pics in the multiterritory partnership.

“It’s a process of internationalization for us that will open up opportunities for Italian directors at a time when Italian cinema is becoming more vibrant,” he enthuses.

Deal was inked by Letta with Alliance chairman Victor Loewy and negotiated for Medusa by its acquisitions chief Faruk Alatan.

Under the agreement, Medusa and Alliance, which is the top Canuck dog and also has outposts in Blighty and Spain, will have a common product pipeline. They will buy movies in tandem, when it suits their common interests, with the leverage that comes from multiterritory deals, and collaborate on high-profile co-productions.

Alliance will release titles in Canada and also in the U.K. and Spain, via its Momentum Pictures and Aurum Producciones subsidiaries. Medusa, the production, distribution and exhibition company that is a unit of Silvio Berlusconi’s Mediaset TV giant, will distribute the titles in Italy, where it is a partner in the country’s largest exhibition chain, the Space Cinema. It also buys TV rights.

And Letta is quick to point out that from a production standpoint “one of the drivers of this agreement is to use the various fiscal and co-production incentives present in Italy and the various countries where Alliance operates.”

Italy has a long-standing moviemaking rapport with Canada that recently spawned Paul Giamatti and Dustin Hoffman starrer “Barney’s Version,” co-produced by Lyse Lafontaine, Ari Lantos and Domenico Procacci.

Italy’s recently introduced production tax credits, which foreign productions can tap into. They’re currently awaiting renewal by the Berlusconi government, but Letta, whose father is Italy’s undersecretary of state, said he is “optimistic” they will be back in place by January.

He expects to be announcing the first joint Medusa/Alliance projects, at least one of which will be shot by an Italo helmer, early next year.

Meanwhile, on the distribution side, Medusa, whose upcoming releases include Woody Allen’s “You Will Meet a Tall Dark Stranger,” “Last Night” and “The Next Three Days,” will be able to benefit from Alliance’s close relationships with Focus Features, Relativity Media, CBS Films and the Weinstein Co., among other indies.

The pact is flexible and non-binding. “It doesn’t mean that every movie that Alliance buys for several territories must necessarily go out in Italy,” he specifies.

“It does mean that since we often cater to similar audiences, by joining forces we can obtain an economic advantage both for ourselves and for the sellers we buy from.”