Sainsbury's has had an undisclosed approach for the £1 billion-valued group that owns Argos and DIY chain Homebase rejected.
The supermarket said it made an initial approach for Home Retail Group in November and is still deciding whether to table a former offer.
The supermarket, which made the approach amid an industry price war, said a combination of the two stores would create a strong food and non-food retailer with strong heritages.
Shares in Home Retail jumped 34% after details of the November approach emerged, while Sainsbury's stock slipped more than 3%.
A street-talking Argos tweeter has won his firm thousands of fans after an amusing exchange with a customer in Manchester.Read the full story ›
High street retailer Argos has revealed its best Christmas performance for more than 10 years - with 46 percent of sales made online.
Another strong Christmas for tablet computers and the recent launch of Microsoft's Xbox One and Sony's PlayStation 4 games consoles helped like-for-like sales jump 3.8% in the 18 weeks to January 4.
It said 46 percent of all sales were made over the internet, boosted by its popular check and reserve service allowing shoppers to collect items in store as well as a surge in the use of smartphones and tablets - accounting for a fifth of all sales.
Argos is set to lose one of its most recognisable features as it plans to stop using the traditional little blue pen and slip of paper to take orders.
The pens, slip and the catalogue have long been a staple of the high street store but the decision has been made to move to touch screens according to the Times (£).
The tiny pens with a small slip of paper are used for customers to write down the catalogue numbers of the items they wanted - but the system will now move to touch screens with the order going digitally.
High street chain Argos is launching its own brand of tablet computer designed "with teenagers in mind".
The 7-inch device, called MyTablet, will cost £99.99 when it goes on sale on Wednesday.
A spokesman said the device has been designed "with teenagers in mind offering all the functionality of a traditional tablet with built-in parental controls for younger users".
It will run Google's Android Jelly Bean 4.2.2 operating system and comes pre-loaded with apps, including Facebook and Twitter, and games.
Shoppers on eBay will be able to collect items purchased online from high street stores under two new schemes.
The digital retail giant today launched its Click and Collect service, which allows customers to pick up goods from a variety of major shops:
DW: First, we're switching on eBay’s Click & Collect for all lg merchants who have capabilities to allow customers to pick up in stores.
eBay also announced a trial partnership with Argos involving 50 of its smaller sellers, from whom shoppers will be able to buy items and collect them in Argos stores:
DW: We'll begin with a collection of 50 eBay merchants,who'll be able to offer customers fast, free and local collection at 150 Argos stores
ITV News Business Editor Laura Kuenssberg asked her Twitter followers why they might have stopped shopping at Argos.
Below is a selection of responses she received:
@itvlaurak Argos is the new (old) Woolworths. You think of it when you can't think of any where else and forget the web will be cheaper.
An Argos spokeswoman told ITV News that the company has "no plans" to phase out its famous hard-copy catalogue in the "foreseeable future".
Confusion is likely to have arisen after the retailer's half year results statement said its transformation plans included "repositioning Argos as a digitally-led business from a catalogue-led business."
Home Retail Group's half year results statement warned:
"It is likely that Argos will close or relocate at least 75 stores as their leases come to an end over the next five years."