PARIS (Reuters) - France's Zodiac Aerospace (PA:ZODC) was engulfed in fresh takeover speculation on Wednesday after a French publication said aircraft engine maker Safran (PA:SAF) was preparing a bid, though one source denied the report.
Shares in Zodiac Aerospace gained as much as 26.5 percent, extending earlier gains, after Lettre de l'Expansion issued an email alert saying Safran was "preparing to launch an offer" for the French maker of seats and cabin systems.
A source familiar with the matter, speaking on condition of anonymity, told Reuters, "There is nothing. This is wrong".
A Safran spokeswoman declined to discuss the report, saying it never commented on market rumours as a matter of policy.
Zodiac Aerospace shares closed 11.6 percent higher at 21.285 euros, roughly in line with their earlier gains driven by signals from the Paris-based company that recent shortfalls in seat production were being tackled.
The short-lived additional spike in prices marked the second time in seven weeks that Zodiac shares have surged on a report of bid interest from partially state-owned Safran.
A source close to Safran said in April, following a similar report, that an offer for Zodiac was "not on the agenda".
Asked after reporting a 5.9 percent rise in nine-month revenue on Tuesday if Zodiac had received any merger proposals in the last three months, Zodiac Aerospace CEO Olivier Zarrouati said, "the board didn't receive anything to make it clear".
Safran tried to woo family-controlled Zodiac Aerospace in 2010 only to be rebuffed before launching a bid.
Analysts have expressed mixed views about whether it would make sense for Safran to renew its interest in Zodiac, which had a market value of 6.1 billion euros (4.8 billion pounds) at Wednesday's close.
"In my view it is a little hard to reconcile the strategic logic of a purchase of Zodiac with the strategic priorities that Safran stated at its Capital Markets Day in March," said Harry Breach, aerospace analyst at Raymond James.
During its March investor presentation, Safran said it would favour opportunities which reinforced its footprint in aerospace equipment, with a bias towards top-tier suppliers in high-tech businesses with a recurrent services aftermarket.
Zodiac, which has suffered a series of profit warnings, has said it is not for sale. It reaffirmed financial targets on Tuesday and said its seats division was getting back on track..
However, some analysts say Zodiac is a potentially interesting target after being hit by seat production delays and the profit warnings.