Taiwanese electronics assembler Hon Hai Precision Industry, better known as Foxconn, is close to signing an agreement to acquire Japanese firm Sharp.

The Japanese firm has reportedly favoured Foxconn’s offer over a government-supported bailout.

Until this week, a state-backed fund, the Innovation Network Corp of Japan (INCJ), appeared to be the frontrunner in signing a deal with Sharp.

People familiar with the matter, however, said Foxconn’s bid of around $5.9bn was more than twice the amount proposed by INCJ.

Sharp CEO Kozo Takahashi said the company would focus its attention on the negotiations with Foxconn and continue to study INCJ’s offer.

The Financial Times quoted Takahashi as saying, "We are devoting more resources on Hon Hai to examine the contents of its offer.

"Both sides have given us strong proposals. We are currently studying the contents with fairness and transparency."

Foxconn founder and chairman Terry Gou is meeting Takahashi and Sharp’s lenders to close the deal as soon as possible. Gou had earlier made a personal investment in Sharp’s liquid crystal display facility in Sakai, western Japan.

Takahashi said its partnership at the Sakai facility yielded better results, raising hopes that Hon Hai would safeguard Sharp’s technology.

Sharp, which expects to finalise the deal by the end of this month, lowered its operating profit forecast due to weak demand for smartphone displays.

The company expects its operating income to be ¥10bn ($83m) for the year ending March 2016, compared with an earlier estimation of ¥80bn.

Sharp’s liquid panel display business recorded an operating loss of ¥13.7bn ($114m) with consolidated sales of ¥907.1bn ($7.5bn) in fiscal 2014.

The acquisition is expected to help Sharp remain in business and limit the risks of a major loss.

In May 2015, Sharp sought a bailout of roughly $1.9bn from banks and said that it would cut 5,000 jobs.

In 2012, Sharp unveiled plans to divest a 9.9% interest to Foxconn, but Gou did not show interested after a sharp decline in the Japanese firm’s share price.

According to the Financial Times, in an agreement that closed in 2010, Gou played a key role in a $5.3bn merger between Taiwan-based Innolux Display, 25%-owned at the time by Foxconn, and Chi Mei Optoelectronics.