UPDATE 2-Anglo American to sell holding in Tongaat Hulett

* Plans to sell holding to institutional investors

* Proposes accelerated bookbuild, exchangeable bond issue

(Adds comments by Tongaat Hulett, analyst; updates shares)

By Julie Crust

LONDON, Aug 12 (Reuters) - Miner Anglo American Plc (AAL.L) plans to sell its holding in diversified agri-processing group Tongaat Hulett Ltd (TONJ.J) to institutional investors via an accelerated bookbuild and an exchangeable bond issue.

Anglo said on Wednesday it will offer its entire holding of 51.2 million Tongaat shares, about 49.5 percent of Tongaat's listed shares.

Tongaat shares were down 10.3 percent at 89.99 rand at 1409 GMT, valuing Anglo's holding at about 4.61 billion rand ($564 million).

It did not give any pricing details or the relative proportions of shares to be sold via the bookbuild and bond issue as they will be determined by demand.

Anglo, which is fending off a merger proposal from Xstrata Plc (XTA.L), said 2 billion rand of the exchangeable issue is underwritten by FirstRand Bank Ltd.

"This represents a further restructuring of the group away from its legacy industrial assets to increase concentration on its mining operations," said Charles Kernot, analyst at Evolution Securities.

He said he did not believe the transaction was inspired by Xstrata's approach.

"It is part of the ongoing restructuring of Anglo American that has taken place since the mid-1990s."

In a separate statement Tongaat said: "This is an opportunity to increase the liquidity of Tongaat Hulett's listed equity and enhance the extent and spread of local and foreign shareholders," said Tongaat's Chief Executive Peter Staude.

On Aug 3 Tongaat posted a jump in first-half headline earnings, boosted by higher world sugar prices and the consolidation of its Zimbabwe business, but said it expected a tougher second half. [ID:nL3581925]

Shares in Tongaat have risen 46 percent this year helped by raw sugar prices SBc1 that have surged more than 80 percent to hit a 28-year high on Monday. ($1=8.171 rand) (Editing by Greg Mahlich)