(Adds potential buyers, analyst comment, background)
By Arno Schuetze
FRANKFURT, June 30 (Reuters) - German lighting group Osram has begun talks with potential buyers of its lamps business as it prepares an auction that would allow it to focus on automotive lighting and components, people familiar with the matter said on Tuesday.
Osram confirmed that it had mandated UBS to help it to choose a preferred buyer for a business that analysts have said could be worth up to 1 billion euros ($1.1 billion) including debt.
The lamps division is in the process of being carved out as a separate entity and the sources said an official sales process could start this year.
They added that Osram had been in informal talks with potential buyers since April, including peers in China.
Chinese buyers, which operate in an ultra-competitive and crowded lighting market at home, are expected to be particularly interested in Osram's European and North American sales channels and brands.
Prime candidates could include listed groups such as Foshan Lighting, Zhejiang Yankon Lighting and NVC, though central government often advises which Chinese groups will bid for a strategic asset to keep different groups from driving up prices.
Jefferies analyst Peter Reilly said that a key attraction for an Asian buyer would be the rights to use the Osram brand and Sylvania in North America.
"For an Asian player, not getting a heavy European cost base but getting a strong brand would be very appealing," he said. "I would imagine if you're any one of those Chinese companies this is a once-in-a-generation opportunity."
Separately, several of the private equity groups that participated in an auction for Philips' lighting components business this year, such as CVC, KKR and Bain Capital, are expected to express interest in Osram's lamps operation.
The Philips auction was won by Chinese technology fund Go Scale Capital with a $3.3 billion deal.
The buyout groups along with Zhejiang Yankon Lighting and NVC declined to comment. A Foshan representative was not immediately available for comment. ($1 = 0.8954 euros) (Additional reporting by Georgina Prodhan and Deena Yao; Editing by Ludwig Burger and David Goodman)