TOKYO A Japanese state-backed fund planning to rescue unprofitable Sharp Corp (6753.T) is aiming to later merge the solar power business of the electronics maker with a unit of Showa Shell Sekiyu KK (5002.T), the Nikkei daily reported on Sunday.
Innovation Network Corp of Japan (INCJ) is planning to inject more than 300 billion yen ($2.5 billion) into Sharp and secure up to 350 billion yen of financial assistance from the company's two main lenders, sources previously told Reuters.
INCJ and Showa Shell Sekiyu could not be immediately reached for comment. Sharp declined to comment.
The fund is not an investor in Showa Shell Sekiyu. It was unclear from the Nikkei report how INCJ would proceed with such a solar merger.
INCJ is planning to merge Sharp's smartphone display business with Japan Display Inc (6740.T), in which the fund is a top investor. Sources have said it also wants to merge Sharp's home appliances unit with that of Toshiba Corp (6502.T), which is trying to boost its finances in the wake of an accounting scandal.
Taiwan's Foxconn (2317.TW) offered 659 billion yen in a rival bid, according to the Wall Street Journal. But sources have said Sharp and its bankers are leaning toward a bailout by INCJ to keep its technology in Japanese hands, with government officials also favoring a domestic deal that could spur much-needed consolidation in the country's technology sector.
(Reporting by Minami Funakoshi, Ritsuko Ando and Makiko Yamazaki; Editing by Ryan Woo)