Customers leave a Kohl’s store on November 12, 2015 in San Rafael, California.
Justin Sullivan | Getty Images News | Getty Images
A deal would help Kohl’s expand its customer base, which focuses on women’s, men’s and children’s clothing, and boost its presence in the home goods category, which has traditionally accounted for a small part of its business.
Kohl’s stock dipped nearly 2% late Wednesday, while shares of At Home surged more than 7%.
Kohl’s recently started conversations with At Home to explore a deal, the sources said. At Home has been exploring a sale for the last three months, and is already in advanced deal negotiations with private equity firms, including Hellman & Friedman, the sources added.
There is no certainty that an offer from Kohl’s will materialize as a result of the preliminary discussions, and At Home may revert to trying to sell itself to a buyout firm, the sources added, asking not to be identified because the matter is confidential.
Kohl’s and At Home did not immediately respond to requests for comment, while Hellman & Friedman declined to comment.
As of the end of trading on Tuesday, At Home Group had a market capitalization of $1.3 billion.
—CNBC’s Nadine El-Bawab contributed to this report.