Other minority shareholders in the Hitachi unit are expected to sell their stakes to a winning bidder, the sources said, adding that Hitachi Metals would eventually be delisted from the Tokyo bourse. Hitachi Metals had a market value of about 700 billion yen ($6.63 billion) based on Tuesday's close. A buyout would exceed that amount given a premium would be expected.
Hitachi has retained Goldman Sachs Group to advise on the sale while Hitachi Metals has hired Bank of America, the people said. Spokespeople for the two banks declined to comment.
Hitachi and Hitachi Metals declined to comment. The conglomerate said in August it was considering various options for the metals unit.
Japanese conglomerates are driving the country's M&A rebound as they reorganise. Deals taking businesses private have amounted to $41.8 billion this year, up 34% year on year, according to Dealogic.
On Tuesday state-backed Nippon Telegraph and Telephone Corp (NTT) announced it planned to take its wireless carrier business NTT Docomo Inc private in a deal worth 4.25 trillion yen.
The sale of Hitachi Metals is the latest of Hitachi's divestiture of businesses.
Hitachi sold chemical unit Hitachi Chemical Co to Showa Denko and a diagnostic imaging business to Fujifilm Holdings Corp in December last year.
Previously, Hitachi sold semiconductor equipment maker Hitachi Kokusai Electric and power tool unit Hitachi Koki, both to KKR. It also sold car navigation maker Clarion Co to France's Faurecia SA.
(Reporting by Junko Fujita in Tokyo and Kane Wu in Hong Kong; Editing by Simon Cameron-Moore and Jason Neely)
By Junko Fujita and Kane Wu