Fueled by buyout rumors, shares of BMC Software ( BMC) jumped more than 11% Wednesday on heavy volume.

Wall Street insiders say the leading candidate to buy the business software maker is the Texas Pacific Group, which has some $18 billion under investment, and was part of the consortium that took Seagate Technology ( STX - Get Report) private in 2000.

According to one source who wished to remain anonymous, Texas Pacific has been making inquiries regarding BMC for some time. "There's no doubt about that," he said.

There's also a rumor, which could not be confirmed, that the private equity firm has actually made an offer of $25 a share for the company. If so, that would be a premium of 21% over Tuesday's opening price.

In recent trading, BMC shares were up 11.1%, or $2.34, to $23.35.

Whether Wednesday's rumors are well-founded, there has been talk that the company could be a good fit for one of its rivals in the system-software business such as CA ( CA) or Hewlett-Packard ( HPQ - Get Report).

There's even speculation that Oracle ( ORCL - Get Report), which is now expected to complete the acquisition of Siebel Systems ( SEBL) by the end of the month, could be interested, although that theory strikes analysts as a bit of a stretch.

Richard Williams of Garban Institutional Equities says that the company's strong cash flow and solid recurring revenue could make BMC an attractive target. He adds, however, that on a price-to-cash flow basis the stock isn't particularly cheap -- 11 times vs. about 12.3 times for the rest of the enterprise software group.

Moreover, with a market cap of $5 billion, and less-than-stellar performance in recent quarters, it might not be such a tasty morsel.

Short interest in the stock dropped 13% in December, but with 7.9 million shares still short and 5.5 days to cover, it's likely that some of Wednesday's action was attributable to fears of a squeeze.