State-backed Jiangxi Copper, one of China's biggest copper producers, said on Monday it would buy Cupric Holdings Ltd from Pangaea Investment Management Ltd.
The target held around 18.015% of First Quantum's issued share capital as of Dec. 9, according to a separate Jiangxi Copper filing to the Hong Kong stock exchange on Tuesday.
"The transaction is in line with the company's international strategy," the filing said.
The move adds to speculation about First Quantum amid heightened expectations for deals in copper, seen as a critical ingredient in low-carbon technologies. Analysts also cited a Chinese media report on Saturday that said Rio Tinto had joined the bidding for First Quantum.
Reuters could not independently verify the report. Representatives with First Quantum and Rio were not immediately available for comment.
First Quantum shares closed 4.2% higher at C$13.56 in Toronto while the benchmark Canadian share index was down 0.3%.
In early trade on Tuesday, Jiangxi's Shanghai shares rose as much as 6.8% to 15.49 yuan, the highest since Sept. 19.
First Quantum in September disclosed it was in talks with Jiangxi for a potential sale of a minority interest in its Zambian copper assets.
Jiangxi is prevented from buying more than a 20% interest in First Quantum under a standstill agreement reached in October.
First Quantum is also seeking partners for new copper projects, including a possible joint venture with Rio Tinto, Chief Executive Philip Pascall said last month.
Pangaea, in which Jiangxi holds a 45% stake, said in October it had amassed a 10.8% position in First Quantum and could increase that to 16.6%.
"Clearly there's an M&A angle to this, but I wouldn't attribute it entirely to that," Jefferies LLC analyst Christopher LaFemina told Reuters.
"I'm not sure what their (Jiangxi) bigger picture plan is, but I don't think you need to buy equity in the company to negotiate a minority buyout for one of the assets," he added.
First Quantum could also be split up, with Jiangxi taking its Africa assets and its Cobre Panama copper mine going to Rio, Bank of Nova Scotia analysts said in a research note Monday.
(Reporting by Jeff Lewis in Toronto; Additonal reporting by Clara Denina in London and Tom Daly in Beijing; Editing by Richard Chang and Stephen Coates)