With HIT Entertainment in the process of taking over Gullane Entertainment, the future relationship between the Thomas the Tank Engine owner and Canadian associate Cambium Catalyst International remains in question.

While it is undisclosed how much CCI, the merged incarnation of Cambium Entertainment and Catalyst Entertainment, depends financially on its international affiliate, U.K.-based Gullane holds a 19% voting interest in the Toronto operation and a first-look distribution deal on anything it produces.

CCI, which employs about 15 full-timers, is not, however, considered a Gullane asset, says a company insider, and therefore should not be affected by the current takeover.

Considered a hostile takeover, U.K.-based HIT, best known for the Barney the Dinosaur and Bob the Builder series, is in the process of buying Gullane for £4.30 ($10) a share or £139 million ($325 million). Gullane originally rejected the offer, claiming it was too low and recommending to its shareholders not to accept, but in the final week of June the majority succumbed to the offer.

The deal, which represents a third less than HIT’s first purchase offer two years ago, will stand if the company doesn’t get a better bid before mid-July. Carlton of the U.K. and Disney are both rumored to be linked to rival bids.

Meantime, Gullane and CCI refuse to officially comment on what this deal could mean for the Canadian operation.

Catalyst Entertainment, founded by Charles Falzon, had a long-held strategic relationship with Gullane (and formerly Britt Alcroft), sharing distribution rights on Thomas the Tank Engine. The Canadian company would both produce and distribute for its international counterpart and ultimately piggyback on Gullane’s international profile and clout.

In February 2002, when Catalyst merged with Cambium, a union that culminated in a 1,000-hour library, the relationship with Gullane was diluted.

Gullane took what it wanted from the newly formed library – namely Monster By Mistake, Nilus the Sandman and the gourmet excursion series that include Aveentura, Entrada and the new Panasia – separating the Gullane and Catalyst libraries and effectively appearing completely independent of each other, although still housed in the same Toronto office. Falzon removed himself almost completely from the Canadian operation (with the exception of a seat on the board), taking on the primary role of Gullane president, and Cambium’s Arnie Zipursky was named chairman and CEO of CCI.

CCI is currently in preproduction on: 26 new episodes of the animated kids series Monster by Mistake; Burger High, an MOW coproduced with Toronto’s Accent Entertainment for CTV; 26 half-hours of Time Blasters, a live-action copro with Wilson Coneybeare; and Panasia.

Thomas is inarguably HIT’s main interest in Gullane, but the purchase would also bring established brands Sooty and Fireman Sam to the HIT fold, making it the leading independent preschool operator.

On the flip side, the deal may also force a quick sale of Gullane’s older skewing properties like Guinness World Records.

-www.hitentertainment.com

-www.gullane.com