Executives of the firm had planned to buy the brewer and 350 pubs from its parent company, Swallow Group, but talks collapsed on Tuesday after failure to reach agreement over the supply of beer to the 350 pubs that Swallow would keep.

Swallow wanted to continue to receive Vaux beers at a fixed and preferential rate, but agreements could not be reached.

Peter Catesby, Swallow's chief executive, said: "I am very disappointed that, at this late stage in negotiations ... agreement could not be reached."

The deal was expected to raise between �75m and �100m if an agreement could have been reached.

If a buyer cannot be found, Swallow is expected to close its breweries in Sunderland and Sheffield and keep the pubs. This would lead to the loss of 150 jobs at Sheffield's Wards brewery and 600 at Vaux in Sunderland.

The Vaux brand may disappear, together with the Samson and Lambtons beers the brewer produces.

Talks hit the rocks

Problems encountered during the negotiations led to the sacking last month of former chief executive of the parent company Martin Grant and former finance director Neil Gossage. Both were against the deal.

The Vaux brand may disappear if no deal is reached

It is thought there were concerns that the buyout was being led by Frank Nicholson, brother of Sir Paul Nicholson, the Swallow chairman.

There was speculation that the talks could be hitting problems early this month when a four-week period of exclusive discussions between the two parties ran out.