Takeda Pharmaceutical Co. Ltd. said it is considering making a potential takeover bid for Shire PLC.
Japan's largest biopharmaceutical company said the consideration is at a "preliminary and exploratory stage" and the company has not reached out to Shire's board.
Shares in Dublin-based Shire rose about 17% to 3,605 pence as of 12:30 p.m. London time.
Market participants had been speculating a deal between Takeda and Shire in recent days.
Shire stocks were trading more than 5% higher March 28, prompting the U.K. Takeover Panel to pressure Takeda to clarify its intentions on the company.
David Cox, an analyst at Panmure Gordon & Co., expressed pessimism on the potential bid, saying: "All positive noises but Takeda is one of the most conservative companies out there in the space when it comes to M&A, and personally I do not think Takeda will go through with this."
Takeda now has until April 25 to make an offer or declare it will not make one, according to the rules of the U.K. Takeover Code.
Evercore Partners International LLP, J.P. Morgan and Nomura are Takeda's financial advisers on the potential transaction.