BLAVOD Black Vodka, the AIM-listed drinks group, is understood to be in talks to acquire the Extreme Beverage Company, a US rival, for about £5 million in an all-paper deal.

The group, which floated on the Alternative Investment Market in February 2001, is also trying to raise about £8 million from institutional investors in a placing of new shares to fund the marketing of the enlarged group’s brands.

Blavod announced in September that it was in preliminary talks over a possible all-paper deal to buy a spirits business that would involve “the introduction of a significant new shareholder”. However, it has so far refused to comment on its target.

The Extreme Beverage Company’s main brand is Players Extreme Vodka, which has several flavoured versions, although it also has a gin and several rums. Blavod believes that it would be able to use its existing distribution channels, including Tesco, Asda and Sainsbury’s, to push sales of Extreme Vodka.

The Extreme Beverage Company, based in Tennessee, was founded two years ago by Jeff Hopmayer, who made his millions from Original American Scones, the company that provides Starbucks, the US coffee chain, with all its baked goods.

Mr Hopmayer, who owns 80 per cent of the Extreme company, and the minority shareholders are all understood to be taking new Blavod shares. Mr Hopmayer is expected to join the Blavod board as a non-executive director.

The share placing is being test-marketed in the City in advance of a formal investor roadshow. Blavod’s shares remain suspended.

Neither party was available for comment.

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax