Should the deal go ahead Foxconn is tipped to close the Australian operation which last year stopped selling TV's. The copier business which is the most profitable part of Sharps operations in Australia is tipped to go to a distributor with the appliance business which is already struggling set to be closed down.
Foxconn' challenger for the loss making business is a Japanese state-backed investment fund, people with direct knowledge of the matter said.
The board of the ailing electronics maker met on Saturday to discuss the two takeover proposals, according to the sources, who requested anonymity because they were not authorized to speak to the media.
The company's 13-member board holds a regularly scheduled meeting on Wednesday, and aims to vote on the competing offers at an extraordinary meeting the next day, the sources said.
Sharp said earlier this month that it was devoting more resources to studying a deal with Foxconn, an Apple supplier known formally as Hon Hai Precision Industry Co.
At this stage it is not known what role Apple is playing in the deal. ChannelNews understands that Apple has agreed to deliver long term display contracts to Foxconn if they secure the deal.
A deal with Foxconn would give Sharp much-needed resources to develop advanced organic light-emitting diode panels, which Apple is said to be adopting in its iPhone within a couple of years.
The Taiwanese firm, the world's largest electronics assembler, has offered to invest US$5.9 billion in Sharp, far more than the 300 billion yen investment proposed by state-backed Innovation Network Corp of Japan .
Sharp declined to comment while INCJ officials could not immediately be reached. Foxconn said it had no comment, citing previous remarks by its chairman, Terry Gou, that it was in a silent period during its negotiations with Sharp.
Gou was in Japan late in the week following a visit to Taiwan by Sharp executives. Their report formed part of Saturday's board discussions, one source said.
Foxconn said this month it had agreed with Sharp on most points of a deal, but the sources said the situation remained fluid with both bids still on the table.
The Taiwanese firm has offered to pay 100 billion yen as a cancellation fee if it does not go through with the deal, one source said.
Another source said Sharp's main lenders oppose the INCJ proposal, which calls for them to cancel the preferred shares they own.
In recent days, INCJ has made a final push, objecting to two Sharp board members who it says have a conflict of interest as they represent a fund that holds preferred shares in the electronics company, sources said.
INCJ, plans to combine Sharp's loss-making display business with rival Japan Display which like a lot of Japanese display Companies is struggling.