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UPDATE 2-Franchise Group enters exclusive talks over Kohl's sale

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(Changes dateline, adds share movement)

June 7 (Reuters) - Kohl's Corp has entered into exclusive negotiations with retail store operator Franchise Group Inc over a potential sale of the department store chain, valuing it at nearly $8 billion, the companies said late on Monday.

The bid of $60 per share constitutes a premium of 42.5% to Kohl's Monday closing price. Kohl's market value stood at about $5.4 billion based on the stock's last close.

The company's shares rose nearly 10% to $45.55 in early trading on Tuesday.

Franchise Group, owner and operator of retail stores such as The Vitamin Shoppe and Buddy's Home Furnishings, said the companies have entered into a three-week-long exclusive discussion.

"The purpose of the exclusive period is to allow FRG and its financing partners to finalize due diligence and financing arrangements and for the parties to complete the negotiation of binding documentation," Kohl's said.

Kohl's said the deal is subject to board approval and provided no assurance that an agreement would be finalised.

Several bidders, including private-equity firm Sycamore Partners and J.C. Penney investors Simon Property Group Inc and Brookfield Asset Management Inc had submitted competing offers for Kohl's recently.

The U.S. department store chain was under pressure after activist investors Macellum Advisors GP LLC and Engine Capital LP called on Kohl's earlier this year to sell itself. (Reporting by Ann Maria Shibu in Bengaluru; Editing by Sherry Jacob-Phillips)