Nanjing Xinjiekou Department Store said it planned to set up a subsidiary in Britain to acquire Highland Group.

It planned to fund the deal through internal sources and bank loans, although no value was provided. The company made the announcement in a statement to the Shanghai stock exchange.

The news comes after Reuters reported on Friday that Sanpower Group had agreed to buy an 89 percent stake in Britain's House of Fraser in a deal that valued the department store at over 450 million pounds, including debt, citing a source close to the deal.

(Reporting By Donny Kwok; Editing by Anne Marie Roantree and Miral Fahmy)