Franchise Group said in its statement that it intends to contribute about $1 billion in capital to a transaction, which will be funded through a corresponding increase in the size of its secured debt facilities. The Delaware, Ohio-based company said most of the financing will be provided based on Kohl’s real estate assets.

The purpose of the exclusivity period is to allow Franchise Group and its financing partners to finalize due diligence and financing arrangements, Kohl’s said in its statement.

Kohl’s shares, which had fallen 15% this year, rose about 15% to near $48 after the close of regular trading Monday. Earlier, they had closed up 1.5% to $42.12, giving the company a market value of $5.4 billion. The exclusive talks were reported earlier by the Wall Street Journal.

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Kohl’s, based in Menomonee Falls, Wisconsin, said in February it had rejected takeover offers for the company because they undervalued it and had engaged bankers to field additional interest in the company.

Both Sycamore Partners and a suitor backed by hedge fund Starboard Value LP had engaged with Kohl’s about a potential deal amid activist investor pressure to sell, Bloomberg News reported. While it was unclear how much Sycamore was willing to pay for Kohl’s, Acacia Research Corp., the Starboard-backed suitor, had offered $64 a share, or about $9 billion.

Last month, activist investor Macellum Capital Management’s bid to overhaul the Kohl’s board was rejected by investors. Macellum contends that Kohl’s should sell its real estate assets or separate the e-commerce division if it’s unwilling to sell the full company.

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