Ambac FinancialGroup Inc. is bidding to acquire CIFG Assurance North America Inc., Reuters reported April4, citing "people familiar with the matter."

Reuters said that acquiring CIFG would give Ambac an option toincrease management fee revenue.

The people told the news outlet CIFG has engaged to explore a sale ofthe company. Some of the sources also said AssuredGuaranty Ltd. may consider acquiring CIFG, according to the report.

Spokespersons for CIFG, Ambac, Houlihan Lokey and Assured Guarantydeclined to comment, the news outlet said.

Ambac's board is facing a challenge from activist shareholderCanyon Capital Advisors LLC,which has raised concernsabout Ambac President and CEO Nader Tavakoli. Canyon has nominated Eugene Davis and two others for election to theAmbac board. Reuters said the bid to acquire CIFG would also give Ambac an advantageover Davis' nomination, since Davis is chairman of CIFG.