OSAKA -- Sogo Co., a financially strapped department store chain, is in talks with longtime rival Mitsukoshi Ltd. on selling its flagship store in a prime Osaka shopping district, sources close to the talks said Tuesday.

Sogo has also been in talks with Daimaru Inc., which has an outlet next to Sogo's Shinsaibashi district flagship, but it is now leaning toward striking a deal with Mitsukoshi, which is offering a better price, the sources said.

The deal with Mitsukoshi is expected to be valued at nearly 30 billion yen, an amount exceeding what Sogo could get from Daimaru, they said.