Mumbai: Spice Mobile hit the 10 per cent upper circuit at Rs24.95 on following reports that Japanese mobile handset maker Sony Ericsson is talks to acquire the mobile phone company.

The small-cap scrip had outperformed the market over the past one month till 10 July 2008, rising 4.85 per cent compared to the Sensex's decline of 8.29 per cent. It had also outperformed the market in the past one quarter, rising 3.42 per cent compared to Sensex's decline of 11.9 per cent.

The stock, with a face value of Rs3, is currently ruling at around Rs 25. Over the last 40 days, Spice Mobile shares have lost one-third of the value, from a high of Rs35.9 on 29 May.

The BK Modi group, which owns 63.2 per cent stake in Spice, had demanded Rs80-100 a share, which values Spice Mobile at around Rs700 crore, reports said. The company has an equity capital of Rs 22.39 crore.

Reports said Sony Ericsson, the world's third-largest handset manufacturer, is in talks to acquire BK Modi's Spice Mobile.

Spice Mobile is the handset company of the Modi group and sells mobile phones under the Spice brand. 

Source said Spice Mobile had initially approached Sony Ericsson for a 'wide-ranging collaboration and partnership', but as the talks progressed, it was felt that an acquisition would suit both companies better. ''If Sony Ericsson were to acquire more than 50 per cent in Spice Mobile, it will have to make an open offer as per our regulations. They want to acquire a majority stake, but it has not yet been finalised if it will be a 100 per cent buyout,'' a report quoted a source as saying.

Spice Mobile is a part of Spice Corp, a $2 billion multi-faceted group, previously known as MCorp Global.

Spice Mobile phones, which started off with entry-level handsets, is growing rapidly today and has a bouquet of offerings targeting entry, mid and premium segments.