Birmingham-based mobile phone maker Sendo is in talks to avert a financial crisis.
It is in partnership and takeover discussions with three rivals interested in acquiring the expertise to make handsets tailored to operators' wishes at low cost.
Chief executive Hugh Brogan said: "We're in discussions with three companies. As a matter of fact they are all in the handset industry. They are partnership deals, some of which may result in a takeover.
"We're very close to concluding a transaction."
Motorola is believed to be one potential suitor. Motorola declined to comment and Mr Brogan would not name the potential suitors.
But, in a weekend report, he was quoted as saying: "It is definitely the case that we are in stormy waters financially and consequently we are trying to find solutions."
The potential investment interest in privately owned Sendo comes as larger players look to supply tailored phones to mobile network operators. Sendo also supplies tailored phones.
The six-year-old firm can make fully featured basic handsets for as little as £14 at a time when Motorola and Nokia have set their sights on the low-cost segment of sub-40 phones for emerging markets. Sony Ericsson president Miles Flint recently recently said he was unable to play in that ultra-low segment because of his higher cost structure.
Mr Brogan once joked that while Nokia employs more secretaries than Sendo's entire payroll, his small company is not limited to the low-end phone segment. The company has also produced several mid- range models and smartphones.
"We do our own plastics, our own electronics, all our software. And we do it with 300 staff. They (the large manufacturers) have 300 people for one phone," he said.
Mr Brogan, who used to work at Motorola's handset division before leaving for Philips in the mid-1990s, said Sendo needed extra money to keep going and growing.
Sendo initially dealt mostly with small operators who wanted a special design to make their handsets stand out from larger rivals, but of late it has also sold to global giants such as Vodafone and Telefonica.
Handset vendors together sold 684 million phones last year, with the top six accounting for almost 80 per cent of those.
Sendo sold five million phones last year, up from
1.6 million units in 2003, and Mr Brogan expects to sell 6.5 to seven million handsets this year.
"It put a huge strain on our financial resources," he said.
Sendo had "bumped in and out of profitability" in recent months as a result of heavy investments to expand operations, he added.
The assembly of its handsets is carried out in the Far East and its Birmingham base is its research and development centre.
In the year to the end of September 2003, Sendo lost £41.3 million on turnover of £56.1 million.
Sales are now believed to be nearer £200 million.
Last September, Sendo settled a legal dispute with Microsoft after accusing the software giant of passing on its trade secrets to a rival handset manufacturer. Microsoft agreed to hand back its four per cent stake in the business, which it acquired in 2001 for $12 million, as part of the settlement.
However, Sendo has since been embroiled in another legal dispute, this time with Ericsson over an alleged patent infringement.
Sendo is fighting the case. Analysts agree that big companies with strong balance sheets have an edge in an industry in which operators demand large up-front investments from a smaller selection of suppliers, without giving guarantees they will sell all the products.
"The market is consolidating," said analyst Ben Wood at Gartner Research.