The 32-year-old Swiss shot-stopper was an ever-present in the Premier League under new Hornets boss Marco Silva after the Portuguese head coach took over at the KCOM in January.
Silva instantly dropped summer signing David Marshall in favour of Jakupovic and it was no surprise to learn that he wanted him at Watford shortly after his appointment late last month.
Watford's current number one Heurelho Gomes had a good season last term but is now 36 and the Hornets know they will have to find a long-term replacement soon.
It's being reported that the Hornets have made a £1.7million bid for Jakupovic, but the Foxes have now also made a similar offer so it appears to be a straight choice between the two clubs.
While the Foxes were believed to be favourites, Silva will no doubt hope the fact he gave him regular game-time at Hull will persuade him to move to Vicarage Road instead of the King Power Stadium where Kasper Schmeichel holds the number one jersey.