Sharp shares spiked as much as 8 percent early on Monday amid reports that Taiwan's Hon Hai Precision Industry, also known as Foxconn Technology, is willing to shell out 300 billion yen ($2.45 billion) for the Japanese electronics giant following months of speculation.
However, there are strings attached. Under the proposed deal, Hon Hai—the world's largest contract supplier of electronics products—is demanding Sharp undergo a complete management reshuffle, including the resignation of President Kozo Takahashi, local media reported late on Friday.
Hon Hai shares were down 0.3 percent in early trade.
While the news remains unconfirmed by either company, the $2.45 billion sum would represent around a 50 percent premium to Sharp's current market value and Hon Hai may even shoulder Sharp's massive debt load, which stood at 760 billion yen ($6.3 billion) as of September, the reports said.
Traders have long been anticipating such a tie-up, with Hon Hai chairman Terry Gou repeatedly expressing his desire to invest in the firm.
In 2012, Sharp considered selling Hon Hai a 9.9 percent stake, but despite the deal falling through, Gou told local media in 2014 that he was still interested.
A deal of this fashion would bolster Sharp's ongoing restructuring efforts as it seeks to raise funds after being bailed out by local banks in May for the second time in three years.
Sharp was once the poster child of Japan's consumer electronics boom, but intensifying competition from China has weighed on its liquid crystal display (LCD) business. The Osaka-based firm has faced four annual losses in seven financial years and for the year ending in March, operating profit is now expected at 10 billion yen ($82.3 million), well below previous forecasts of 80 billion yen.