David Davies, finance director, said the approach was a preliminary one from a company wanting to discuss a merger. The shares rose 35p to 163.5p, valuing LIG at pounds 446.2m. In spite of the price rise, Mr Davies said he was not required by Stock Exchange rules to disclose the identity of the bidder.
The news led to speculation that the bidder was Safeskin, a San Diego- based rival with a 69 per cent share of the US condom market.
LIG, which has 22 per cent of the world condom market, has struggled to expand its secondary business of latex gloves in the US against competition from cheap Asian imports.
In December its shares fell by 30 per cent when it revealed a loss of pounds 9.8m, down from a profit of pounds 5.7m. Much of the loss stemmed from problems at its Alabama subsidiary, Aladan, acquired in 1996.
The group responded to criticism from the City two weeks ago, announcing it was cutting 10 per cent of its staff and closing its headquarters in London.
LIG's biggest rivals in the condom and latex gloves market include Carter- Wallace and Pacific-Dunlop. Competition authorities are likely to resist a merger with either company because of the scale of their respective market shares.
Observers believe Safeskin would raise fewer competition concerns. While Safeskin has a big presence in cheap examination gloves for doctors, it has a lower share in the more expensive powder-free gloves that LIG has begun to develop.
Mike King of SG Securities said: "There is a fair amount of growth within the gloves market. [A merger with Safeskin] would put LIG in a position to grow its gloves business from there."