UPDATE 2-Textron shares climb amid takeover chatter

Shares of Providence, Rhode Island-based Textron have been beaten down by about 87 percent over the past 12 months -- a far steeper drop than the 54 percent slide of the Standard & Poor's capital goods industry index .GSPIC -- as the global recession has hit demand for corporate aircraft and hammered its finance arm.

Representatives of Textron, Lockheed and Raytheon declined to comment.

Last week, Textron said it planned to cut production rates at its Cessna jet unit, as well as its industrial operation, which produces EZ-GO golf carts.

Lewis Campbell, Textron's chief executive, in February said the company would consider selling one of its core business units if it needed to do so to protect cash flow, though he argued it was unlikely it would need to make such a drastic move.

In March, the president of United Technologies Corp (UTX.N)'s Sikorsky helicopter unit said that it would be "an interesting hypothesis" for his company to take over Textron's Bell helicopter unit.

Textron is moving to pare down its finance arm, which has been hard hit by the global financial crisis.

In afternoon trading, about 50,000 call options, which give buying rights to Textron's shares, traded. That is nearly 12 times the normal volume, according to option analytics firm Trade Alert. (Reporting by Scott Malone, additional reporting by Doris Frankel in Chicago and Karen Jacobs in Atlanta; Editing by Bernard Orr, Leslie Gevirtz)