Shares in Goodwin PLC (LSE:GDWN) rose 13% to 21250p after the company confirmed it is considering the sale of a substantial part of its mechanical engineering division.
The move values the Staffordshire-based engineering group at about £1.6 billion.
Goodwin said its board had commenced a strategic review to consider a range of potential options to maximise value for shareholders.
The company was responding to recent press speculation about a possible sale.
It said the options under consideration include the disposal of a substantial part of the mechanical engineering division.
That division takes in GSC, GI, Noreva, Easat and Pumps.
Goodwin said the review would also seek to ensure continuity for stakeholders, including customers, and the long-term prosperity of its businesses.
Discussions are ongoing and there can be no certainty that a transaction will be entered into, the company said.
Rothschild & Co, the investment bank, is advising the board on the review.
The board said it would update shareholders on progress as appropriate.
Goodwin is a family-controlled group that traces its roots to 1883.
Alongside mechanical engineering, it operates a refractory engineering arm supplying materials used in high-temperature industrial processes such as metal casting and jewellery manufacturing.
The company's mechanical engineering operations produce valves, pumps, castings and radar systems, with customers spanning the energy, defence and nuclear sectors.
Goodwin has been one of the stronger performers on the London market in recent years, with defence and energy demand supporting order books across the sector.
The shares have risen sharply from levels below 5000p three years ago.
