Mitsubishi Heavy Industries of Japan is preparing an offer to buy British Nuclear Fuel's US-based nuclear power station construction unit Westinghouse.
BNFL is best known for its UK Sellafield reprocessing plant
The offer, which is expected to value the unit at around $1.8bn (£1bn), is not the first approach received by British state-owned BNFL.
Mitsubishi Heavy may team up with Mitsubishi Corp or US firms to bid.
Many countries, including China, are poised to expand their nuclear power plant construction.
Mitsubishi is believed to be preparing the bid to head off US rival General Electric and to increase Mitsubishi's business outside Japan, where public sector projects have slowed.
Critics of the proposed sale of Westinghouse by BNFL say it is shortsighted as high oil prices and environmental concerns mean demand for "cleaner" nuclear energy is set to rise.
They say Westinghouse could make a lot of money advising China and other countries that have plans to build more power stations.
Moreover, BNFL has announced that it has cut its losses by half to £144m.
If Mitsubishi Heavy gets permission to acquire Westinghouse, it would be the first major foreign acquisition by the Japanese industrial equipment maker.
Mitsubishi Heavy denied that US sensitivity to foreign takeovers of energy firms would be a problem.
Professor Fells finds BNFL's timing 'mystifying'
"We have conducted extensive research and don't expect such problems as far as US government approvals are concerned," Hideo Ikuno, a Mitsubishi spokesman, told Reuters.
"Mitsubishi and Westinghouse have been in partnership for 40 years and the two firms are in a complementary position.
"If BNFL wants to sell Westinghouse, we want to buy," he said.
BNFL said a sale would make sense if it is to deliver value to UK taxpayers.
BNFL, which operates the Sellafield waste reprocessing plant in Cumbria and the UK's remaining older Magnox stations, said on Friday that it had already received a number of approaches for Westinghouse.
Japan's Nihon Keizi newspaper said Areva Group of France, General Electric and a corporate acquisition fund are interested in buying Westinghouse.
However, energy expert Professor Ian Fells of the Royal Academy of Engineering, described BNFL's decision to sell Westinghouse as "mystifying".
"I and a lot of other people who follow the nuclear industry are mystified by this decision," he said.
"Westinghouse is being sold off just before it looks like starting to make a serious amount of money."