Terumo Corp (4543.T) has made an offer to merge with Olympus Corp (7733.T), starting with an investment of 50 billion yen ($639 million) to raise its stake in the embattled camera and medical device maker to 15 percent from 2.1 percent, the Nikkei reported.
Terumo, which also makes medical devices, plans to appeal directly to Olympus shareholders and will announce its proposal on Thursday, the business daily reported on Thursday.
Under the surprise proposal, both firms would remain separate under a holding company, the paper said.
If merged, Olympus and Terumo would rank eighth in medical device sales worldwide, based on current figures, the daily said.
There is no overlap between their mainstay products -- catheters for Terumo, endoscopes for Olympus -- and Terumo believes a merger would be a win-win, the Nikkei added.
Olympus already has an offer from Sony Corp (6768.T) under which Sony would invest 50 billion yen in the company. Talks on that deal are in the final stages, the daily said.
The deal would give Sony an entry into the high-margin medical device market to help make up for weakness in its consumer electronics business.
Olympus is struggling to recover from an accounting fraud uncovered last year by its then-CEO Michael Woodford. It was forced to correct years of accounts, which has badly weakened its balance sheet.
The company has been seeking a partner to help rebuild its finances.
Sony emerged as the finalist in that search, out of a field that included Terumo, Fujifilm Holdings Corp (4901.T) and Panasonic Corp (6752.T), the business daily added.
($1 = 78.22 Japanese yen)
(Reporting by Prateek Kumar in Bangalore; Editing by Sreejiraj Eluvangal)