Donegaldaily.com understands LIDL has offered €1.9 million for the site – if they get planning permission for a new supermarket.
However all parties are remaining tight-lipped about any possible deal.
Donegal Creameries boss Ian Ireland said that as a matter of policy they do not confirm of deny rumours regarding company activity.
Speculation is mounting on the future of the workers at the Oatfield Sweet Company which is owned by Dublin-based confectioners Zed Candy.
There are now 15 workers at the plant who are anxious about their future.
Although Donegal Creameries does not own the site on which Oatfields is located, it does have a major share on the site.
Lord Mayor of Letterkenny Cllr Gerry McMonagle said he too was concerned about mounting speculation about the future of the well-known sweet company.
He confirmed he has been approached to meet with workers who revealed to him how fitters had been at the plant this week measuring machinery with a view to relocation.
Last year 26 workers were let go from Oatfields when its boiled sweets operation was transferred to its sister company Tilleys in Britain.