Call them strange bedfellows but Blackfeather Ltd and AdultShop.com (ASC), both firms catering to adult entertainment needs, are set to collaborate on a steamy deal as ASC announced on Tuesday that it is taking over Blackfeather's Stiletto brothel operation.

In exchange for $20 million worth of ASC shares, priced at 21 cents each, AdultShop would take ownership of the Sydney-based Stiletto in a merger that would see a capital raising of $10 million aimed at sophisticated and professional investors.

In its statement, AdultShop said that the proposed merger "will be inter-conditional and will not be completed unless each other stage is completed," as it added that the deal would be subject to approval by ASC shareholders.

As a result of the deal, the ASC board said that company shares were pushed up to a value of 2.5 cents per share as it emerged from a trading halt on Tuesday and by 1036 AEST on the same day, the shares were trading at 1.3 cents.

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AdultShop said that its shares were exchanging at 1.2 cents from just a week ago and even peak at 1.6 cents before steadying as the market closed on Friday.

According to AdultShop, both companies were bound to a three-month exclusivity agreement, restricting the two entities from soliciting rival bids from any third party sources within the allotted period.

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