Shares in French aerospace and defence group Safran rose to a decade high after a report it was ready to buy Italian firm Avio, though a source familiar with the matter dismissed the report.
The article in weekly La Lettre de l’Expansion said Safran was ready to pay 4 billion euros ($5.74 billion) for engine maker Avio, but did not cite sources and gave no other details.
A source familiar with the situation told Reuters the report was wrong, and a spokesman for Avio said the group was still working on plans for an initial public offering, Reuters reports.
“The company, in agreement with the shareholders, is working on a listing in Milan,” the spokesman said.
Share in Safran, which said it didn’t comment on market rumours, rose as much as 5.7 percent to a near 11-year high in brisk volumes after the report’s publication. At 1518 GMT, the stock was up 3.4 percent at 29.19 euros.
“(4 billion) seems very expensive; had 2 billion euro valuation in mind … Bear in mind Safran could use up to 3.5 billion euros in cash for acquisition without raising capital,” a Paris-based trader said.
Avio, based near Turin and with revenue of 1.75 billion euros last year, is majority owned by private equity group Cinven, while Italy’s Finmeccanica owns a 15 percent stake.