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Casino Royale director Martin Campbell is also in talks to helm the Universal production, which the studio said will owe more to the Daphne du Maurier short story than the subsequent film.
Watts was rumoured to be taking the lead role last year, but her agreement was said to be dependant on the script.
Michael Bay, Andrew Form and Brad Fuller will produce the film via Platinum Dunes, with Peter Guber and Cathy Schulman producing via Mandalay Pictures.
According to Variety, Stiles White and Juliet Snowden have written a script that is "still being developed" and "new scribes may be brought aboard".
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