Metro, which owns 95 stores in China and real estate assets in major cities such as Beijing and Shanghai, is planning to offload a majority stake in its China business, said the people.
The sale move is part of a global reorganisation of the wholesaler and comes as China's wholesale and retail sectors are experiencing disruption from e-commerce players.
Metro's China business could yet be valued at up to $3 billion, said two separate sources with direct knowledge of the matter.
Potential bidders include electronics retailer Suning Holdings Group, supermarket chain operators Wumart Stores Inc and Yonghui Superstores, according to three of the people.
Private equity firms such as Hillhouse Capital Group and Bain Capital are also studying a potential deal, they added.
Property makes up the bulk of the value in Metro's China business, the people said, cautioning, however, that there is a large gap between price expectations among buyers and the seller.
A Metro spokeswoman in Germany said the company is in talks with potential partners concerning the further development of its China business but declined to comment on details of its exchanges with potential partners or the sale process.
Bain and Suning declined to comment. Yonghui and Hillhouse did not immediately respond to requests for comment. Calls to Wumart went unanswered.
First-round, non-binding bids are due in the second week of April, said two of the people. Citigroup and JPMorgan are advising Metro, the people said. The banks declined to comment.
All the sources declined to be named as the deal talks are not public.
E-commerce giant Alibaba Group Holdings has also been in talks with Metro about taking a stake in the China business, Reuters previously reported.
Tech giants such as Alibaba and Tencent have been investing in supermarkets and shopping malls to help develop their online-to-offline strategy.
Alibaba in 2015 poured $4.6 billion https://www.reuters.com/article/us-alibaba-suning-appliance/alibaba-to-invest-4-6-billion-in-china-electronics-retailer-suning-idUSKCN0QF0VP20150811 into Suning's listed entity - Suning.Com Co Ltd and holds a 19.99 percent stake, its biggest step towards integrating online and store-based shopping at the time.
Tencent, which has invested 4.2 billion yuan https://www.reuters.com/article/tencent-holdings-yh-superstores/chinas-tencent-invests-4-2-bln-yuan-for-stake-in-yonghui-superstores-idUSL4N1OF3VC in a 5 percent stake of Yonghui, is also forming a partnership in China with Europe' s largest retailer Carrefour.
The German wholesaler opened its first China store in Shanghai in 1996 and now has over 11,000 employees in the country. Its sales in the country reached 2.7 billion euros ($3 billion) in the financial year of 2017-2018, according to its website.
Once a sprawling retail conglomerate, Metro has been restructuring in recent years to focus on its core cash-and-carry business, selling Kaufhof department stores and then splitting from consumer electronics group Ceconomy.
Metro is also trying to offload its loss-making Real hypermarkets chain.
(Reporting by Kane Wu, Julie Zhu and Sumeet Chatterjee in Hong Kong; Additional reporting by Matthias Inverardi in DUESSELDORF; Editing by Jennifer Hughes and Muralikumar Anantharaman)
By Kane Wu and Julie Zhu