Private equity groups the Carlyle Group (CG) and BC Partners are reportedly in late-stage talks to buy the industrial divisions of United Technologies (UTX) in a deal that could be valued as high as $3.5 billion.

The consortium of private equity companies has emerged as the leading candidate to buy United Tech’s Hamilton Sundstrand subsidiary that includes the pump and compressor businesses, three people familiar with the matter told Reuters.

While these people said a deal could be imminent, they cautioned that other bidders for the United Tech group, including TPG Capital, are still in the running.

The suitors are vying for the Hamilton Sundstrand industrial business, which is one of three units United Tech CEO Louis Chenevert said in March that he would sell in order to fund the company’s September 2011 $16.5 billion takeover of Goodrich (GR).

On Monday, the diversified industrial manufacturer said it would sell its Rocketdyne space unit to GenCorp (GY) for $550 million as part of efforts to raise capital for the Goodrich buy.

Shares of Carlyle Group surged 4% to an all-time high of $23.84 on Tuesday morning, while United Technologies slumped 1.4% with the broader market. Neither Carlyle, BC Partners nor United Technologies immediately responded to a request for comment from FOX Business.

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