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Correction: This story has been updated to reflect the location of the facility is not yet known.
Speciality dairy company A2 Milk has confirmed it is in talks to buy a manufacturing facility.
Australian share market operator ASX sought answers from A2 on Friday, after its share price gained 11 percent before being placed in a trading halt.
In a carefully worded response, A2 said it was "possibly" aware of unannounced information that could explain the spike in its share price.
The company highlighted stimulus measures announced by the Chinese government as a possible reason for the trading of its shares, but also revealed discussions over a new plant in China.
A2's chief legal and sustainability officer Jaron McVicar said: "For completeness, consistent with its publicly announced strategy which includes developing infant milk formula manufacturing capability and increasing China market access, A2M is currently in discussions regarding the potential acquisition of a manufacturing facility.
"These discussions are incomplete with no binding terms agreed, due diligence not yet completed and there is no certainty a transaction will occur. As such there is no further meaningful information to disclose at this stage."
A2 said it believed it was complying with listing rules.
"A2M considers it likely that the recent trading is likely to have been driven by the news relating to actual and speculated China stimulus measures," McVicar said.
"A2M doubts that its participation in confidential and incomplete discussions regarding a potential acquisition is materially price sensitive given uncertainties including whether it will proceed, if so on what terms and conditions, and what impact it may have on the company."