TOKYO, March 27 (Reuters) - Private equity firm KKR

is nearing a deal to acquire Japanese medical gear maker

Topcon ( TOPCF ), according to people familiar with the matter,

marking the latest sign of increased leveraged buyout activity

in Japan.

If the talks are successful, a deal could be signed in the

coming days, the sources said, requesting anonymity as the

discussions are confidential. The price being discussed has not

been disclosed yet.

Topcon ( TOPCF ) has a market value of about 323.4 billion yen ($2.15

billion), and opened at 2,944.5 yen per share on Thursday, down

0.9% from Wednesday's closing price.

KKR and Topcon ( TOPCF ) declined to comment.

The potential deal comes as Japan's corporate governance

reforms, rising shareholder activism, and a weak yen have

created a favourable environment for dealmaking, particularly

for private equity firms.

A growing number of Japanese firms under pressure from

activist funds have recently chosen to go private, including

chemicals company JSR and software firm Fuji Soft.

Topcon ( TOPCF ) has been exploring a sale with the help of its

advisers, and several private equity firms have been bidding to

take the company private.

Founded in 1932, Tokyo-based Topcon ( TOPCF ) also manufactures and

sells eyecare, smart infrastructure and positioning products.

Industrial conglomerate Toshiba previously owned 30% of Topcon ( TOPCF ),

but sold its entire stake in 2015.

Activist investors ValueAct Capital and Oasis Management

Company are the largest shareholders of Topcon ( TOPCF ), holding stakes

of 13.69% and 10.58%, respectively, according to data compiled

by LSEG.

In its most recent quarterly earnings, Topcon ( TOPCF ) projected a

group operating profit of 7 billion yen ($46.51 million) and

sales of 211 billion yen for the year ending March 31.

($1 = 150.4900 yen)