Furniture business MFI is close to finalising the sale of its loss-making retail arm to a private equity group.
MFI has closed 13 sites since the start of 2006
Merchant Equity Partners (MEP) is poised to take control of the 200-store chain for a reported nominal fee of £1.
Responding to newspaper speculation, MFI said on Monday that discussions with MEP were at "an advanced stage".
It is thought that MEP and MFI are set to contribute £100m each to revive the struggling retail chain, which lost £14m in the first half of 2006.
Profit and loss
A deal would leave MFI able to concentrate on its profitable Howden Joinery trade business and its loss-making furniture manufacturing operation.
Howden made a profit of £51m in the first six months of the year, and its profits have helped to offset problems with MFI's other businesses in recent years.
Management hope to expand the 320 strong chain of Howden depots to 500 by 2010.
But MFI's manufacturing operations are struggling, losing £25m in the six months to 10 June.
It has closed a number of UK factories as it looks to source more products from overseas.