Icelandic investor Baugur is mulling a move to buy Danish brand Noir.
Baugur is thought to be targeting the luxury brand to add to its existing stable of premium labels, which includes PPQ, Matthew Williamson and Day Birger et Mikkelsen.
An acquisition would also mark Baugur's first serious move into the ethical fashion sector as the deal would include Noir's ethical cotton brand Illuminati II, which is in development and is due to be launched next year. Noir will use Illuminati II in its own range, but will also supply third parties. It is manufactured in Africa.
An industry source said of the rumoured deal: "Baugur and Noir are in the midst of it all and a deal will inevitably happen. They are about three weeks away from signing."
Baugur chairman Jon Asgeir Johannesson has a long-standing interest in investing in small businesses that need cash to grow.
Peter Ingwersen, the former managing director of Day Birger et Mikkelsen, founded Noir in 2005. It has 35 global stockists.
Noir was unavailable for comment. Baugur declined to comment.