Shares in Rolls-Royce fell in early trading on Monday as rumours of a potential takeover bid wore off.
On Friday, March 25, shares at the aerospace giant surged following speculation the owner of Air India was looking to acquire 30 Airbus jets powered by engines built by Rolls-Royce.
There were also rumours of a potential takeover or merger circulating last week, according to the Times .
A blog post on financial website Betaville claimed Rolls-Royce was about to be involved in a "significant corporate transaction with an unidentified suitor".
Shares climbed 19.3% to 110p on Friday amid the speculation. However, Rolls-Royce did not make any official announcements.
With no confirmation from the engineering giant, there was a sharp turnaround on Monday, reversing Friday’s surge. Rolls-Royce’s share price dropped to 97.8p - down 11.13% in early trading.
Victoria Scholar, head of investment at financial firm Interactive Investor, said: “With nothing confirmed so far, the shares are losing steam this morning. However they are still trading significantly above Thursday’s close, suggesting there is still some M&A premium in the price with investors pinning their hopes on an approach.”
It is not the first time there has been speculation about a potential acquisition of Rolls-Royce. In 2015, similar rumours were circulating after the company issued a series of profit warnings. Then, in 2020 and amid the pandemic, the rumours emerged again.
In February, Rolls-Royce's chief executive Warren East announced plans to stand down after nearly eight years at the helm. The announcement of Mr East's departure came as the company posted its full-year financial results.
The engineering giant reported full-year profits of £124m - up from a £3.1bn loss a year earlier, after delivering its restructuring programme a year ahead of schedule.
Rolls-Royce, which has UK bases in Derby and Filton, near Bristol, has cut nearly 9,000 jobs from its global workforce since the pandemic hit. It has also already announced plans to sell off four of its ancillary businesses - two of which were sold in 2021. The sales are expected to generate around £2bn for the company.
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