FRANKFURT, Germany - Speculation over the future of German department store chain Karstadt flared again on Friday after a newspaper reported that billionaire Nicolas Berggruen could sell out to Austrian investor Rene Benko and Israeli businessman Beny Steinmetz. Daily paper Bild said that Berggruen was in talks with Vienna-based Signa, Benko's property vehicle, which could buy more than 70 percent of Karstadt for 1 euro ($1.36).

The report followed news this week that the chief executive of loss-making Karstadt stepped down after only five months in the job, hinting at a lack of support from the company's billionaire owner and raising questions over the chain's future.

A source familiar with the matter had told Reuters in November that Steinmetz, a diamond and mining entrepreneur, and Benko could take a stake in Karstadt through an option to buy 75.1 percent of its main business, comprising 83 department stores, for 1 euro.

The real estate arm of Steinmetz's BSG group and Signa last year formed a joint venture to invest in German retail property.

Karstadt, Berggruen, Benko and BSG were not immediately available for comment, while Signa declined to comment.

Berggruen rescued Karstadt from insolvency in 2010, but he has come under fire from German unions and media for not investing enough in the chain, allowing rival department store group Kaufhof to take market share.

Department stores around the world have faced difficulties in recent years in the face of competition from e-commerce players such as Amazon, prompting suggestions that Kaufhof could buy Karstadt or a third party investor could buy and merge both chains.

Kaufhof owner Metro's Chief Executive Olaf Koch on Thursday said he had no interest in combining the two chains. Berggruen sold 75.1 percent stakes in Karstadt's separate premium and sports divisions to Benko last year. ($1 = 0.7331 Euros).