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.

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.