Coolabi has reached an understanding with North Promotions to accept its offer for buyout, the company announced yesterday. Venture capital group Edge Performance owns North Promotions, which is already Coolabi's largest investor.

The potential offer from North Promotions of 7.75p per share in cash with an alternative share in North Promotions.

The offer remains subject to a number of pre-conditions, and there is no guarantee an offer will be made.

Coolabi's brands include the new preschool series "Poppy Cat;" the classic small films brands Bagpuss and the Clangers; and the girls' tween brand Scarlett and Crimson. The company's revenues were for the first half of 2011 were £605,514, down from £961,670 for the same period last year.