"Sony Corp is now the front-runner among a group of bidders, including Panasonic Corp for a capital stake in Olympus Corp," 'Wall Street Journal' reported citing sources familiar with the matter.
Other companies in the race for Olympus are Japanese camera maker Fujifilm Holdings Corp, medical equipment maker Terumo Corp, the report said.
However, the report noted that the negotiations between Olympus and Sony are still in the early stages and could fall apart.
Post an accounting scandal last year, the struggling medical equipment maker has been seeking an investor to inject around 50 billion yen (USD 622.65 million) to shore up its finances.
For Sony, an alliance with Olympus would strengthen its ties with a key customer for its optical sensors and aid its efforts to build its medical business.
On the other hand, Panasonic has not exited the bid but has become less aggressive as the company didn't include an investment figure in its proposal, the daily said citing sources.
Earlier this month, Olympus announced that it will slash 2,700 jobs worldwide in the next two years. Besides, it is aiming to raise its capital adequacy ratio to 30 per cent by fiscal 2017.
The company also outlined restructuring measures like consolidation of manufacturing plants, but struggling camera business remains a key challenge.
