Lagardere to exit Canal Plus in 2010 to fund M&A

* Canal Plus stake sale could raise 1.3 bln euros -analysts

* Sale seen funding sports, publishing M&A, dividend

* No financial pressure seen to sell EADS stake soon

By Cyril Altmeyer

PARIS, Oct 19 (Reuters) - France's Lagardere (LAGA.PA) is set to raise some 1.3 billion euros ($1.9 billion) early next year for acquisitions and a special dividend by selling its 20 percent stake in pay-TV group Canal Plus to Vivendi (VIV.PA).

The world's biggest publisher of consumer magazines, including Elle and Paris Match, is seen in less of a hurry to sell the 7.5 percent it still owns in European aerospace and defence group EADS (EAD.PA), analysts said.

"They don't need to sell it, and now wouldn't necessarily be the best time. I am looking for an exit from Canal Plus France before," Morgan Stanley analyst Edward Hill-Wood said.

Lagardere considers itself to be a pure media company and is selling unrelated businesses. It is banking on sports -- including TV rights, event organisation and merchandising -- and the digital media sector to drive its growth in coming years.

Under a January 2007 shareholder pact, Lagardere has a window to sell its stake in Canal Plus between March 15 and April 15 each year until 2014.

It also has an option to raise the holding to 34 percent before selling it. Analysts doubt that Lagardere will exercise that option, however, which expires at the end of the month.

Lagardere is rather seen just selling its existing stake, particularly as other Canal Plus shareholders TF1 (TFFP.PA) and M6 (MMTP.PA) are expected to sell their 9.9 percent and 5.1 percent stakes in February for minimum guaranteed amounts of 747.5 million euros and 384.2 million.

Vivendi, which already owns 65 percent of Canal Plus, has said it will buy the TF1 and M6 stakes if they decide to exercise their put options.

Europe's largest entertainment group, whose policy is to buy out minority shareholders, could be flush with cash if it ends up selling its 20 percent stake in U.S. media group NBCU. The shareholding is valued at $6 billion.

Lagardere has not agreed a minimum selling price with Vivendi for the Canal Plus stake. It hopes to raise around 1.5 billion euros from the sale but it is more likely to end up with 1.2-1.3 billion, analysts said.

EADS PROBE

Lagardere would use the cash to look for acquisitions in sports, pay an exceptional dividend and reduce debt, Morgan Stanley's Hill-Wood said.

Other analysts said Lagardere could look for acquisitions in publishing, citing Simon & Schuster, a unit of CBS, as a possible target. The company is valued at between 900 million euros and 1 billion.

Lagardere shares have gained 18.52 percent so far this year, giving it a market capitalisation of 4.5 billion euros.

The timing of a sale of Lagardere's stake in EADS, meanwhile, will also hinge on the final outcome of a probe into suspected insider trading and a recovery in EADS's share price to levels that make it attractive to sell, analysts said.

In July, Lagardere was provisionally cleared by France's AMF stock market watchdog over suspected insider trading.

"Once the AMF investigation is finished, if the EADS share price is where it is today or if it is lower than where it is today they probably wouldn't sell it. If the market continues its rally and EADS gets closer to 20 euros, it's not clear yet what they would do with the cash", MF Global analyst Meg Geldens said.

"They don't need cash. They don't need to reduce debt. I don't think there's any rush to sell it," she added.

EADS shares closed at 14.15 euros on Friday.

Lagardere cut its net debt to 2.143 billion euros at end-June 2009 from 2.619 billion euros at end-December 2008. Last month, it launched a five-year one billion euro bond to repay a syndicated loan maturing in 2012. ($1=.6694 euros) (Reporting by Cyril Altmeyer, Writing by Dominique Vidalon; Editing by Mike Nesbit)