UPDATE 1-Suntory close to buying Orangina - source

* Talks at delicate stage, deal not guaranteed

* Deal likely to exceed purchase price (Adds background about companies and industry, comment, bylines)

By Megan Davies and Martinne Geller

NEW YORK, Sept 9 (Reuters) - Privately held Japanese beverage group Suntory Holdings is close to a deal to buy soft drinks maker Orangina from its private equity owners, Blackstone Group (BX.N) and Lion Capital, a source familiar with the situation said on Wednesday.

The Wall Street Journal earlier reported the news, saying that the price is likely to exceed the $2.6 billion that Blackstone and Lion Capital paid for it in 2006.

Talks are at a delicate stage, the source said, and it is not guaranteed that a deal will be reached.

The firms all declined to comment, or could not be reached for comment.

A deal for Orangina could spark consolidation in the beverages industry and mark a successful exit for the private equity buyers. Buyout firms have struggled to find exit routes for their investments amid the financial turmoil, and traditional routes of selling assets to rivals or taking them public are only just starting to become viable again.

"I think we're going to see more deals and deals at higher prices," said Tom Pirko, president of Bevmark LLC, a beverage consulting firm. "It's going to be a good time, for the first time in a long time, to be a seller, as opposed to just a buyer."

Lion Capital and Blackstone bought Orangina, which gets most of its revenue from western Europe, in February 2006 from what was then known as Cadbury Schweppes for 1.85 billion euros ($2.2 billion at the time).

The British candy and drinks giant later separated its remaining U.S. soft drink business into another company, now called Dr Pepper Snapple Group Inc (DPS.N). The confectionary company Cadbury Plc CBRY.L is now the subject of an unsolicited takeover bid from U.S. giant Kraft Foods Inc (KFT.N).

Pirko said Orangina tends to sell well at restaurants, which have been suffering in the downturn as cash-strapped consumers dine more at home to save money.

"Orangina, aside from the iconic bottle and the fact that it always had good on-premise business, has a hard time competing on the shelf," he said.

Orangina has about 2,500 employees and had 2008 sales of about 1 billion euros.

Privately held Suntory, and larger competitor Kirin Holdings (2503.T) said in July they had begun preliminary talks to create a food and beverage giant with some $41 billion in annual sales, putting it on par with U.S. behemoths like Kraft and PepsiCo Inc (PEP.N).

Suntory is known in Japan for its "Premium Malt's" beer and "Boss" canned coffee.

Last year Suntory outmaneuvered Kirin and Asahi Breweries Ltd (2502.T) with a more than 600 million euro ($836 million) deal for Danone's (DANO.PA) Frucor juice unit and said it was ready to spend another $2 billion or so on acquisitions.

(Reporting by Megan Davies and Martinne Geller; Editing by Richard Chang)