SINGAPORE - Unusual trading activity in the shares of mainboard-listed precision engineering firm Innotek could be linked to a possible takeover of the company.

Innotek told the Singapore Exchange on Friday that it has received a letter from one of its substantial shareholders, Gazelle Capital, in which Gazelle said it was "in discusssions regarding a transaction which may or may not result in an offer for the shares of the company".

Gazelle added in its letter that the "discussions remain very preliminary".

The exchange had sent a query to Innotek on Thursday asking about what it called "unusual volume movements" in Innotek shares that day.

Innotek replied to SGX later on Thursday to say it was unaware of any possible explanation for the activity.

In its update on Friday, Innotek said it got the letter from Gazelle after its reply to SGX on Thursday.

It added that other than Gazelle's discussions, it was "not aware of any other possible explanation" for the unusual trading activity.

Innotek shares were trading at at 40.5 cents, up by 3.5 cents, at around 4.30pm on Friday.