STOCKHOLM (Reuters) - Shares in Swedish industrial technology and software firm Hexagon AB (HEXAb.ST) soared to a record high on Wednesday after a newspaper report said it had held talks on a possible sale to a U.S. or European rival which could value the company at about $20 billion.
The Wall Street Journal, citing people familiar with the matter, reported late on Tuesday that talks between Hexagon and the potential buyers were at an early stage and that the company may ultimately decide not to pursue a sale.
Industrial software and technology firms are in high demand as manufacturing processes become more automated and intelligent through the use of sensors to gather more digital data.
Recent deals include Siemens' (SIEGn.DE) $4.5 billion acquisition of U.S.-based Mentor Graphics, announced late last year, and ABB's (ABBN.S) purchase of industrial automation company Bernecker & Rainer.
Hexagon said in a statement on Wednesday it "regularly evaluates various opportunities to optimize the company’s positioning and shareholder value".
"Should these evaluations lead to concrete results, the market will be immediately informed," it said.
Shares in Hexagon rose more than 17 percent in early trade and were still up 11.3 percent at 420.40 crowns by 1008 GMT, valuing the company at about 150 billion crowns ($17.3 billion) and putting it just outside the 10 largest Swedish listed firms and well ahead of companies such as home appliances maker Electrolux (ELUXb.ST).
Swedbank analyst Mathias Lundberg said a deal was possible but expressed doubts about the reported price tag.
"If you look at the price tag it's too low to let Hexagon go. And the company has a long way left on its own journey. They are merely at the beginning of the whole digitalization part," he said. Swedbank has a neutral rating on the stock.
Investment firm Melker Schorling AB (MELK.ST), Hexagon's biggest shareholder with a 26 percent stake and 46.9 percent of voting rights as of the end of May, declined to comment. Its shares were up 6 percent.
The second biggest owner in Hexagon is fashion retailer H&M Hennes & Mauritz's (HMb.ST) chairman Stefan Persson's Ramsbury Invest, with a 4.8 percent stake.
Over the past year Chief Executive Ola Rollen has faced allegations of insider trading while long-time chairman Melker Schorling recently stepped down due to poor health.
Rollen's trial in Norway on charges of insider trading, which relates to an investment that did not involve Hexagon, is expected to start in late October. Rollen denies wrongdoing.
As CEO, Rollen has helped transform a sprawling conglomerate with a market value of a few billion crowns in 2000 into a measurement technology market leader following a steady stream of acquisitions and high growth.
In February it bought U.S.-based MSC Software in a $834 million deal to boost its portfolio in automated manufacturing.
Its sensors and software are used for measurement and quality inspection in manufacturing processes and in engineering plant design and operations. Its products are also used in areas such as infrastructure planning, construction, mining, agriculture and energy.
"I think it is not unlikely there will be some kind of structural change in Hexagon over time," Handelsbanken Capital Markets analyst Daniel Djurberg said, pointing to Hexagon's industrial-focused business as the main attraction for prospective buyers.
"But I think it would be a complex process for potential buyers to buy all of Hexagon with a big premium if they only are interested in half of the company."
Hexagon, which has around 18,000 staff, had sales of 3.1 billion euros in 2016 and is aiming for sales of 4.6-5.1 billion euros by 2021.
Additional reporting by Helena Soderpalm and Olof Swahnberg; Editing by Niklas Pollard, Greg Mahlich