The sources declined to be identified because the discussions are private.

Still, Franchise Group’s entry in the process gives Kohl’s more options as it explores a sale under pressure from activist hedge funds. The buyer will have to secure committed financing to assume Kohl’s debt pile, which totaled $6.8 billion at the end of 2021, including operating leases.

Franchise Group has a market value of $1.6 billion and carried long-term debt of $1.9 billion as of the end of December. Its ability to carry out the deal would largely depend on the backing of Vintage Capital Management LLC, an investment firm run by retail investing veteran Brian Kahn.

Vintage owned a 12.3% stake in Franchise Group as of December and Kahn was its chief executive.

A consortium backed by private equity firm Leonard Green & PartnersAuthentic Brands

Private

Representatives for Franchise Group, Hudson’s Bay, Leonard Green, Sycamore and Acacia did not respond to requests for comment.

A representative for Kohl’s could not be reached for comment.

Kohl’s, which operates more than 1,100 stores in the United States, is fighting to fend off a board challenge even as it considers selling itself. Hedge fund Macellum Advisors GP in February nominated 10 directors to the company’s 14-member board, arguing it has not done enough to improve its business and that it should sell itself.

Last week, Macellum urged the company to be more open about the sales process and give bidders and shareholders a fuller financial picture of itself.

In response, Kohl’s said it is thoughtfully and thoroughly evaluating proposals. Its investment bankers had held conversations with more than 20 potential buyers, the company has disclosed.