VANCOUVER - Film studio Lions Gate (NYSE:LGF) has acquired Summit Entertainment, the maker of the teen hit "Twilight" series.

The price tag of the cash and share deal, announced late Friday, is about US$412.5 million -- but most of that will come from cash that's on Summit's balance sheet.

Lionsgate will pay US$170 million of the purchase price in cash, debt and stock, while Summit will refinance an existing loan with a $500 million credit line, secured by collateral of Summit's assets.

The deal would create a studio among the largest in Hollywood.

It would bring together under one roof "Twilight" and another expected popular teen series "The Hunger Games," which Lions Gate is set to release in March.

"They have a tremendous outreach with fans and the ability to reach them through email, Facebook, et cetera," Lions Gate CEO Jon Feltheimer said of Summit. "Starting right now, today, we are going to utilize that institutional knowledge to move "Hunger Games" ahead even more quickly."

Lionsgate is based in Santa Monica, Calif. but has key operations in Vancouver.

Lionsgate said the transaction will expand its 13,000-library of old movies to sell to home video and TV channels and allow it to grow its production and distribution capacity and international sales.

The combined company will also be able to consolidate administration and become more efficient.

"This transaction continues Lionsgate's long-term growth strategy of building a diversified worldwide media company through a combination of disciplined, accretive strategic acquisitions and organic growth while maintaining a solid balance sheet," Feltheimer said.

"We are uniting two powerful entertainment brands, bringing together two world-class feature film franchises to establish a commanding position in the young adult market, strengthening our global distribution infrastructure and creating a scalable platform that will result in significant and accretive financial benefits to Lionsgate shareholders."

For Summit's shareholders, the Lionsgate transaction follows a special dividend of around $200 million that accompanied a US$750 million refinancing last March.

Big winners in the deal also include Summit's management, including co-chairmen Rob Friedman and Patrick Wachsberger, who owns about 30 per cent of Summit, and Summit's majority owner, Suhail Rizvi's of Rizvi Traverse Management.

But they said they would stay on to run Summit as a subsidiary.

"It was never about cashing out; it was about making sure this historic company we built continues to live on, now with healthy parental support," Friedman said. "At the end of the day, this became the best and most exciting opportunity to keep the company going and make it two and two equals five or six."

Lions Gate Entertainment Corp. (NYSE:LGF) already has a strong TV studio, which makes popular series such as "Mad Men," "Weeds," "Nurse Jackie" and is the key distribution partner of comedian Tyler Perry, including his shows "House of Payne" and "Meet the Browns."

But the studio had been distracted recently by a lengthy shareholder battle with activist investor Carl Icahn, who finally agreed last year to sell most of his shares and focus his attention elsewhere.

Feltheimer said Lions Gate would look to consolidate and pare down the combined studios' upcoming slate of movies but didn't specify how much.

Before the merger, they were on track to release a combined 22 to 27 films a year, on par with Hollywood's biggest studios. Time Warner Inc.'s Warner Bros., for example, aims to put out 18 to 22 movies a year.