TAKEOVER talks at cash-strapped imaging company Comeleon could lead to the creation of up to 300 jobs within two years.

The County Durham firm has been in discussions with a strong competitor in the telecoms industry which, if successful, would open up a string of opportunities.

The deal would be a reverse takeover, with publicly listed Comeleon looking to buy a bigger, private company.

The identity of the proposed acquisition has not been made public because of ongoing delicate negotiations, but chief executive Roy Stanley categorically stated it was not a mobile phone operator.

The takeover target is believed to be a substantial, profitable business with a turnover in the hundreds of millions of pounds.

Mr Stanley said: "We are both excited by the prospect. This potentially will give us avenues of distribution we have not been able to access before. It will be positive for the whole region, subject to it finally happening.

"If it does go through it will mean substantial job creation - two to 300 within the next two years."

Comeleon employs about 100 staff at its site in Tanfield Lea, near Stanley, where it puts pictures and images on plastics, primarily mobile phone covers and computer equipment.

But it has struggled to maintain its early momentum which increased its share price straight to 173.5p on the opening day of trading.

Its shares were suspended on Wednesday at 9.5p about a possible acquisition. At the same time the company laid bare the severity of its financial position.

At the end of January it had a £1.7m cash balance, but two months later this had been cut to £770,000.

An analyst said: "There is always a danger, depending on timing, Comeleon will not complete this deal fast enough to stop themselves running out of money.

"But if they could get in bed with a bigger company, that bigger company will provide the financial resources for the Comeleon business to work.

"The shareholders will benefit from having a much broader business.