Dangdang, an Amazon Inc (>> Amazon.com) rival in China, is also in talks with other potential investors, said the people, who declined to be identified as the matter was private.
Dangdang told Reuters it has been approached by investors and has not accepted any offer. It said, without elaborating, that other details of talks with suitors were inaccurate. HNA declined to comment.
The development comes after $50 billion worth of deal-making over the past two years sparked public scrutiny of HNA's opaque ownership and use of leverage, prompting the conglomerate to slow the pace of acquisitions in recent months.
The buying spree has brought HNA business interests as varied as aviation, logistics, hospitality and financial services. The Dangdang talks come as HNA looks to build e-commerce platforms.
The latest deal is likely to value Beijing-based Dangdang at 8 billion to 10 billion yuan ($1.2 billion to $1.5 billion), the people said. Financial terms are not yet finalised and the talks could still collapse, they said.
HNA aims to own slightly more than 90 percent, one of the people said.
The acquisition, if successful, would give HNA access to a major local e-commerce platform that evolved from a leading bookseller to a marketplace of over 14,000 stores selling goods as varied as DVDs, cosmetics, clothes and furniture.
China is the world's largest e-commerce market. Online retail as a percentage of total retail has grown steadily in the last few years, with Alibaba Group Holding Ltd (>> Alibaba Group Holding) and JD.com Inc (>> JD.com) leading the segment.
HNA plans to buy the majority of Dangdang from management, mainly Chairwoman Peggy Yu and Chief Executive Officer Li Guoqing, who founded the firm in 1999, the people said.
Dangdang was taken private for $556 million last year, having debuted on the New York Stock Exchange in 2010.
HNA is also scouting for co-investors for the deal, said one of the people.
HNA and other Chinese conglomerates have come under scrutiny due to the billions of dollars spent on marquee real estate properties and global brands, with the government concerned about the impact of capital outflows on the value of the yuan.
HNA has nevertheless completed a number of long-stalled overseas acquisitions in recent weeks. It is set to complete the $1 billion acquisition of Singapore-listed logistics firm CWT Ltd (>> CWT Ltd) next week.
The conglomerate also obtained Ministry of Commerce approval this month for the $775 million purchase of 51 percent of the oil products and logistics business of Glencore PLC (>> Glencore).
(Reporting by Kane Wu and Julie Zhu; Editing by Sumeet Chatterjee and Christopher Cushing)
By Kane Wu and Julie Zhu
