LETTS Filofax, the Dalkeith-based diary maker, could be set to change hands in a deal worth an estimated £40 million.
It is understood that London-based venture capitalists are in talks to buy the UK's biggest diary specialist, which employs around 300 people and can trace its roots back more than 200 years.
The Midlothian firm - which is one of the biggest employers in the region - has seen its profits grow markedly in the last couple of years, despite fears that electronic personal organisers would replace paper diaries.
It has launched new products, such as paper that works with electronic pens, and has also ramped up international sales. Meanwhile, profits have been boosted by cost reduction measures, including curbs on staff costs.
Phoenix Equity Partners is believed to be in exclusive talks to take control of Letts, where managing director Gordon Presly led a management buyout about six years ago. Mr Presly has an 11 per cent stake in the business.
If a deal is completed, Dunedin Capital Partners, the Edinburgh-based private equity firm which backed the 12.2m buyout of Letts from Bemrose in 2000, would be in line for a hefty return on its investment.
Previous deals completed by Phoenix Equity Partners include providing expansion funding for the fashion retailer Mulberry.
Figures for the year to the end of January 2005 show Letts Filofax grew its pre-tax profits by 72 per cent to 6.84m, on sales up a more modest two per cent to 56m.
The firm paid some 17m to take over the Filofax business in 2001, three years after American firm Day Runner bought it for 50m.