* Atlantia expected to sweeten bid near end of acceptance period
* Improved bid to value Abertis at no less than 19 euros per share
* Italian firm ready to pay only cash for Abertis
By Pamela Barbaglia
LONDON, Feb 8 (Reuters) - Italy's largest motorway operator Atlantia has secured financing to raise its takeover bid for rival Abertis but any improved offer could take up to a month to materialise, two sources familiar with the matter told Reuters.
A new bid is expected to value Spain's Abertis at no less than 19 euros a share, or around 17 billion euros, as the Italian firm needs to trump a 18.76 euro per share offer made by German builder Hochtief in October.
Atlantia's top managers told U.S. investors in New York this week that the Rome-based firm was ready to pay only in cash, rather than using a mix of cash and shares as initially envisaged, said the sources, who both attended the meetings.
Atlantia has been locked in a bidding war with Hochtief, the German arm of Spanish builder ACS, for almost six months.
It initially approached Abertis last May with a cash offer of 16.5 euros per share and also offered new Atlantia shares on the basis of a swap ratio of 0.697 Atlantia shares for each Abertis one. But its bid was challenged by Hochtief five months later when the German firm submitted its counter-bid.
The tussle pits the Benetton family, which controls Atlantia, against Spanish businessman and Real Madrid president Florentino Perez who is the leading investor in Spanish builder ACS.
The takeover battle is now entering its final stages after Hochtief secured unconditional EU antitrust approval for its bid on Feb. 2.
Atlantia expects Spain's stock markets and merger deals regulator CNMV to approve Hochtief's bid as soon as Feb. 12, said the sources, who both attended the New York meetings. Atlantia's bid has already been cleared by European and Spanish authorities.
A source close to the Italian company said no decision had been taken about the timing or the price of a new bid. Atlantia CEO Giovanni Castellucci said on Jan. 31 it would consider all options for its Abertis offer once the Spanish regulator approves Hochtief's bid.
Atlantia is banking on at least 2.5 billion euros of cost savings to trump the rival 16.9 billion euro offer from Hochtief, one of the sources said.
A pool of investment banks including Credit Suisse, BNP Paribas, Intesa Sanpaolo, Mediobanca and UniCredit has lowered the cost of funding to Atlantia compared to the terms that had been agreed when the Italian company launched its first bid in May 2017, the sources said. This would give Atlantia more firepower to sweeten its bid.
Another source close to the Rome-based company said Atlantia would allow Abertis investors to decide whether they want to be paid in cash or in shares.
While the company's initial bid was conditional on shareholders representing at least 10.1 percent of Abertis share capital accepting payment in Atlantia's shares, the sweetened bid would have no such threshold, the source said.
Atlantia wants Abertis to create the world's biggest toll road operator with a combined market value of more than 40 billion euros. A deal would help it expand in international markets such as France and Latin America, cutting its dependence on low-growth Italy.
Once the Spanish regulator approves Hochtief's bid for Abertis, investors in the Spanish company will have 30 days to decide between the two takeover proposals.
If the bidders decide to raise their respective offers during the last five days of the acceptance period, they would have to do so under a so-called sealed bid process by submitting their "best and final" offer to the Spanish watchdog. The regulator will make those offers public for investors to decide.
The sources said Atlantia wants Hochtief to have as little visibility as possible of its intentions and is likely to wait until the sealed bid contest kicks off to present a new offer.
Under Spanish law, should the gap between the sealed bids be less than 2 percent, Atlantia would be granted one last chance to improve its offer since it was the first to bid for Abertis last year.
Atlantia's chief financial officer Giancarlo Guenzi led the meetings with a series of investment funds in New York.
Guenzi, alongside the company's head of corporate finance and investor relations Massimo Sonego and another investor relations manager, Domenico Dicuonzo, were heading to Chicago on Thursday as part of a roadshow organised by Santander, one of their advisers on the deal, one of the sources said.
Abertis' announcement that it wants to sell its 57 percent stake in satellite firm Hispasat to Spanish grid operator Red Electrica would remove one of the main obstacles to the deal as Madrid sees Hispasat as a strategic asset and doesn't want to lose control to a foreign player. (Additional reporting by Jose Elias Rodriguez and Andres Gonzalez in Madrid and Francesca Landini in Milan, editing by Silvia Aloisi and Adrian Croft)