U.S. defence firm General Dynamics is in talks to deliver battle tanks to Saudi Arabia, beating out German rival Krauss-Maffei Wegmann for the lucrative deal, a German newspaper reported.
Handelsblatt daily cited industry sources as saying on Friday that a deal for Saudi Arabia to buy M1 Abrams tanks from General Dynamics was already in sight.
General Dynamics and Krauss-Maffei Wegmann were not immediately available for comment.
There has been speculation for months that Saudi Arabia could order more than 200 Leopard 2 tanks from Krauss-Maffei Wegmann, though the company has never confirmed such reports.
According to other unconfirmed media reports, Germany gave pre-approval for the export of 270 Leopard 2 tanks to Saudi Arabia in 2011.
Defence sources in Germany have said that the German government wanted to hold off making a decision until after federal elections in September, and Handelsblatt speculated on Friday that Saudi Arabia was no longer willing to wait.
Arms exports are a sensitive issue in Germany given its Nazi past as well as the role arms makers such as Krupp played in feeding 19th and 20th century wars with exports to both sides of conflicts.
Peer Steinbrueck, a leader of the opposition Social Democrats running against German Chancellor Angela Merkel in the election, has criticised her government for letting arms exports surge.
After World War Two, successive West German and later united German governments placed tight restrictions on arms exports, especially to regions where there were armed conflicts or where human rights were poorly respected.