Home Retail has held talks with Habitat owner Hilco about licensing the furniture brand within its DIY chain Homebase.
Items including tins of Habitat-branded paint have been discussed, but not the sale of the entire business. However, it is understood that talks have been put on hold.
Hilco acquired Habitat at the end of 2009 from Ikea founders the Kampard family. Hilco is attempting to turnaround the loss-making business, including expanding into fitted kitchens, closing its Regent Street store and hiring a new management team, led by former New Look boss Phil Wrigley, who is Habitat executive chairman.
Last month Habitat hired former Best Buy marketing boss Kevin Styles as chief executive.