UPDATE 1-Atlantia's focus is on debt reduction before dividends

* Atlantia hopes to get improved offer for Autostrade

* It will decide later about 2021 dividend payment

* Group analyses portfolio, aims to sell non-core assets (Adds Atlantia CEO comments, background)

MILAN, March 12 (Reuters) - Italian infrastructure group Atlantia said on Friday debt reduction would take priority when asked about a potential special dividend if plans to sell its Autostrade per l’Italia business are successful.

The group, controlled by the Benetton family, is in talks with a consortium led by Italian state-lender CDP to sell its 88% stake in Autostrade, in an effort to end a political dispute triggered by the 2018 collapse of a bridge run by the business.

“If Autostrade’s disposal happens, the group will first focus on cutting debt,” Atlantia CEO Carlo Bertazzo said in conference call with analysts after the group published results.

Bertazzo also said he expected Atlantia to receive dividend payments from subsidiaries of around 500 million euros ($596 million) this year. But he said it was still unclear whether the group could pay its shareholders a regular dividend on 2021 results.

“Next year (Atlantia’s) board will decide what the group can do in terms of 2021 dividend, depending also on how the pandemic will impact the businesses for the rest of the year,” he said.

The group swung to a net loss of 1.18 billion euros last year and its net financial debt rose to 41.9 billion euros. The company did not pay a dividend on 2020 results after not paying one for 2019.

The top priority for Atlantia is to sign a final settlement with the Italian government over the bridge disaster, Bertazzo said, after the previous ruling coalition in Italy had threatened to revoke Autostrade’s motorway concession.

Bertazzo said negotiations with the CDP-led consortium would continue in coming “days and weeks” to try and find a compromise on the valuation of Autostrade, the indemnities requested by the consortium and other terms of the suitors’ binding offer.

CDP, together with co-investors Macquarie and Blackstone, has presented a proposal valuing all of Autostrade at 9.1 billion euros but Atlantia’s advisers have said the fair value of the business is 10.5-12 billion euros, three sources have told Reuters.

If no compromise is found with the consortium, Atlantia will press ahead with a planned demerger and listing of its motorway assets Bertazzo said. He also said the group was open to discuss the future of Autostrade with Spanish partner ACS.

The CEO said the new strategy for the group would include new investments and potential disposals of non-core assets, including Portogual’s Lusoponte and Poland’s Stalexport. ($1 = 0.8386 euros) (Reporting by Francesca Landini; editing by Agnieszka Flak and Jane Merriman)