Peter Jackson sells visual effects firm for $1.6bn to Unity

The New Zealand-based visual effects studio co-founded by Oscar-winning director Sir Peter Jackson has been sold for $1.6bn (£1.2bn).

Weta Digital, which has worked on films including Lord of the Rings and Avatar, is being bought by video games software company Unity.

Unity's technology is behind games such as Pokémon Go and Call of Duty: Mobile.

The firms say the deal means that Weta's special effects tools will be "democratised".

"Together, Unity and Weta Digital can create a pathway for any artist, from any industry, to be able to leverage these incredibly creative and powerful tools," Sir Peter said in a statement.

Weta, which was co-funded by Sir Peter in 1993, is known for creating is known for its animated characters such as Avatar's Neyriti, Gollum in the Lord of the Rings film series and Caesar from Planet of the Apes.

Under the deal the company will be split up, with its technology assets being sold to Unity as Weta Digital.

Its visual effects business will remain as a separate company called WetaFX, which is expected to become one of Unity's largest customers.

In a statement, Unity said it will "put Weta's incredibly exclusive and sophisticated visual effects tools into the hands of millions of creators and artists around the world" enabling them to shape the future of the metaverse.

The term metaverse has come into wider mainstream use in recent weeks after Facebook said last month that it would change its name to Meta to better reflect its new focus on connecting users through augmented and virtual reality.

After the announcement of cash-and-stock deal Unity's shares fell by more than 6% in extended trade on the New York Stock Exchange.