Finnish ship engine and power plant manufacturer Waertsilae said on Thursday that it had been approached with an outline takeover offer from British engine maker Rolls-Royce.
"We confirm the approach by Rolls-Royce with a preliminary proposal for a possible offer for the company," the Finnish group said in a statement.
"However, we confirm that there are no longer ongoing discussions with Rolls-Royce."
Rolls-Royce also said in a statement that there had been "preliminary discussions" which were "no longer continuing".
Neither of the groups has revealed any further details about the offer by the British firm.
The statement prompted a rise in Waertsilae's share price, which surged by 5.88 percent at the Helsinki Stock Exchange opening, and went further up by 7.06 percent in mid-morning trading. The overall Helsinki index was up by 0.70 percent.
Waertsilae has lately posted irregular results.
In the third quarter, net profit soared by 25 percent up to 94 million euros ($124 million), but a drop in the orders has forced the company to lower its forecast for the whole year, blaming the uncertainty in the world economy.
Waertsilae's annual results are expected on January 29.