BREAKING… Kathleen Kennedy has been named co-chair of Lucasfilm. Founder George Lucas will become co-chair of the company’s board and stay on as CEO. As part of the deal, seven-time Oscar nominee Kennedy will step down from her post as co-head of the Kennedy/Marshall Co production company, leaving it to Frank Marshall to run.

The move seems a bit bizarre. Kennedy/Marshall days ago made an overall TV deal at CBS, and Kennedy has produced big Steven Spielberg films while Marshall has The Bourne Legacy coming. Lucas, by comparison, seems to mostly continue to find ways to squeeze revenue out of his tired Star Wars films. He excutive produced the passion project Red Tails (Anthony Hemingway directed), which was not a box office hit and seems to be veering toward retirement or making personal films the way his pal Francis Ford Coppola does now. Lucas has all the money he needs, but it seems unclear exactly what Kennedy will be running. We were unable to get clarity on what will happen to Lucasfilm or Kennedy/Marshall, as we were told Kennedy would be unavailable to speak with Deadline. Kennedy/Marshall has a first-look deal with Spielberg at DreamWorks and sources have said they expect it to be business as usual under Marshall. But Kennedy used to be one of the smarter producers in town though her recent movies have underperformed at the box office to the detriment of her reputation: nevertheless, the loss may have an impact.

The duo had produced Oscar nominees War Horse, The Curious Case Of Benjamin Button, and Seabiscuit as well as the Bourne series together. The company is currently in post on Spielberg’s Lincoln, starring Daniel Day-Lewis, which also is expected to be a box office disappointment. Kennedy and Spielberg also teamed for the Indiana Jones and Jurassic Park franchises. Kennedy’s announcement comes on the heels of the Star Wars creator’s musings about retiring from the company to make more experimental films. “George and I have talked about the enormous opportunities that lie ahead for the company, and as George moves towards retirement I am honored that he trusts me with taking care of the beloved film franchises,” Kennedy said in the release that just went out. Here it is in full:

SAN FRANCISCO-Lucasfilm Ltd. today announced that Kathleen Kennedy will become Co-Chair of Lucasfilm. In an effort to move forward with his retirement plans, George Lucas will work with Kathleen Kennedy to transition into her new role. Lucas will become Co-Chairman of the Board of Lucasfilm and continue as CEO. Micheline Chau will remain as President and COO of Lucasfilm, and continue to focus on the day-to-day operations of the business.

“I’ve spent my life building Lucasfilm and as I shift my focus into other directions I wanted to make sure it was in the hands of someone equipped to carry my vision into the future,” said George Lucas. “It was important that my successor not only be someone with great creative passion and proven leadership abilities, but also someone who loves movies. I care deeply about my employees—it is their creativity and hard work that has made this company what it is today. As the company grows and expands I wanted to be sure the employees of Lucasfilm have a strong captain for the ship. I also care deeply about our fans and it was important to have someone who would carry on the passion and care that I’ve given the films over the years. So for me Kathy was the obvious choice, she is a trusted friend and one of the most respected producers and executives in the industry.”

Director Steven Spielberg said, “George’s prescience is once again proven by his choice of my long time producing partner, Kathy Kennedy to co-chair Lucasfilm. Kathy has been a member of both of our families going into a fourth decade so it does not feel like she is going to another galaxy far far away. She will get just as much support from me with Lucasfilm as George has given both of us all these years.”

“George is a true visionary,” said Kathleen Kennedy. “I’ve seen him build Lucasfilm from a small rebel unit in Northern California to an international fully integrated entertainment company. I’m excited to have the chance to work with such an extraordinary group of talented people. George and I have talked about the enormous opportunities that lie ahead for the company, and as George moves towards retirement I am honored that he trusts me with taking care of the beloved film franchises. I feel fortunate to have George working with me for the next year or two as I take on this role—it is nice to have Yoda by your side.”

Seven-time Academy Award nominated Kathleen Kennedy is one of the most successful and esteemed producers and executives in the film industry. As a producer she has an impeccable record with a robust filmography working with such filmmakers as Steven Spielberg, Peter Jackson, Martin Scorsese, Robert Zemeckis, Barry Levinson, Clint Eastwood, David Fincher and Gary Ross. As a testament to her standing in the film community, she previously held the position of governor and officer of the Academy of Motion Pictures Arts and Sciences (AMPAS) and currently serves as a member of the board of trustees. She is also a former President of the Producers Guild of America.

Kathleen will step down from her role at The Kennedy/Marshall Company, shifting her responsibilities to partner Frank Marshall. The Kennedy/Marshall Company is currently in post production on LINCOLN, directed by long time collaborator Steven Spielberg whom Kennedy also produced for on the INDIANA JONES and JURASSIC PARK franchises, and THE BOURNE LEGACY, written and directed by Tony Gilroy and produced by Marshall. Under the Kennedy/Marshall banner, the pair has produced such Academy Award nominated Best Picture films as WAR HORSE (six nominations), THE CURIOUS CASE OF BENJAMIN BUTTON (thirteen nominations) THE SIXTH SENSE, (six nominations) and SEABISCUIT (seven nominations), as well as blockbusters including the BOURNE series and THE ADVENTURES OF TINTIN. Marshall will oversee the company’s current slate of projects and continue to expand it via their development deals with DreamWorks and CBS TV Studios.