UPDATE 1-Buyout groups team up for joint Iglo bid - sources
* Blackstone and BC Partners team up for Iglo bid - sources
* Seller Permira hoping for 2.8 billion euros - sources
* Binding bids due on Thursday - sources
* Blackstone and BC last remaining suitors - sources
By Simon Meads
LONDON, June 20 (Reuters) - Blackstone and BC Partners are jointly bidding for frozen foods group Iglo, hoping to divide the spoils rather than fight it out in what could be Europe's largest buyout of the year, a person familiar with situation said on Wednesday.
The two private equity groups were the last in the frame for the Birds Eye Fish Fingers maker, which seller Permira hopes will fetch 2.8 billion euros ($3.5 billion) when binding bids are tabled on Thursday.
Rival PAI Partners pulled out of the process last month, unable to meet the asking price or find a partner for a joint bid, sources familiar with the situation have said previously.
Blackstone declined to comment. BC Partners and Permira were not available for comment.
Thai firm Charoen Pokphand Foods has been on the sidelines of the auction but is not seen as interested in the whole group, which is Europe's largest frozen foods producer and twice the size of its nearest rival, some of the sources said.
Iglo sold over 2 billion fish fingers in 2011 - enough to circle the earth five times - and enough frozen peas to fill 40 Olympic swimming pools.
Speculation had been rife that the two remaining bidders could join forces, splitting an equity investment that could top 700 million euros and potentially forcing down the price.
By working together, Blackstone and BC will be in a position to table a lower final offer rather than "blow each other's brains out" by attempting to outbid one another, another person familiar with the situation said.
"When there are only two bidders and the equity cheque is quite big it makes a lot of sense to team up because you take all of the competition out of the process," a third person said.
It leaves seller Permira with a tough decision as it tries to extract the highest price for a business bought from Unilever in 2006 for 1.7 billion euros. Iglo bolted on another frozen food group - Findus Italy - in 2010.
Blackstone already owns the Birds Eye brand in the United States through its Pinnacle foods business.
Permira has been hoping for about 2.8 billion euros from the sale, which would equate to about 8 times earnings before interest, tax, depreciation and amortisation (EBITDA), projected to beat 350 million euros in 2012. The company reported EBITDA of 326 million euros for 2011.