* Sells Real ops in 4 countries to French rival
* Deal worth 1.1 bln eur in equity and debt
* Metro says reduces debt by 1.5 bln eur
* Auchan doubles presence in central, eastern Europe
* Metro shares rise 0.5 percent (Adds comments from Metro, Auchan execs, analyst)
FRANKFURT, Nov 30 (Reuters) - German retailer Metro AG is selling its Real hypermarkets in eastern Europe to French rival Auchan in a 1.1 billion euro ($1.4 billion) deal to cut debt and focus on expanding its cash and carry and consumer electronics stores.
Auchan, controlled by the Mulliez family, one of France's wealthiest, said the deal would double its store presence in central and eastern Europe, a key area for development.
Metro has long wanted to sell its Real hypermarkets with their low food margins and is under pressure to raise cash after a profit warning in October prompted ratings downgrades by Moody's and Standard & Poor's.
"Our clear aim is to improve our rating. Downgrades are not something that we are happy to live with," Chief Executive Olaf Koch told journalists on Friday, dismissing the idea of a special dividend with the proceeds.
The deal will allow Metro to cut net debt by 1.5 billion euros. It will be released from a 900 million euro debt burden stemming from long-term rental contracts and receive 600 million cash. Metro's net debt stood at 7.7 billion euros at the end of September according to its balance sheet. But net debt according to rating agencies' criteria, which includes items such as leases, stood at 13.2 billion.
It said the transaction would boost earnings before interest and tax (EBIT) by 40-50 million euros, which would show up in the 2013 results, when it expects the deal will be completed following antitrust approval.
This year's results, however, will take a hit of 60-90 million euros, as it transfers stores and employees.
Metro, which was demoted from the index of leading German shares in September, is also battling an uncertain spending environment in its home market. Despite consumer confidence remaining solid, shoppers do not seem keen to spend and October retail sales in Germany fell more than expected.
Koch said the group was not unhappy with how the crucial Christmas trading period was looking, although southern Europe remained tough.
Metro's cash and carry and consumer electronics divisions are the group's biggest and most profitable. The former unit made sales of 31 billion euros in 2011 while the latter made 21 billion. Group sales in total were 66.7 billion in the same period.
The Auchan deal has a enterprise value-to-sales multiple of 0.4. That compares with 0.63 for French rival Carrefour's sale of its Malaysian operations and 1.33 for Carrefour's sale of its Colombian operations, deemed a hefty price.
Analysts said Metro had secured a good price and welcomed the sale particularly after it had to scrap plans in early 2012 to sell its Kaufhof department stores, the smallest part of its business, when it failed to find a buyer.
"(The) merits of the deal are clearly positive and the total consideration of 1.1 billion euros is good as well," Commerzbank analyst Juergen Elfers wrote in a note.
Auchan is buying 91 Real hypermarkets in Poland, Russia, Romania and Ukraine. Real has sales of over 2.6 billion euros in those four countries and employs around 20,000 people.
Auchan, the world's twelfth largest retailer, has 98 hypermarkets with more than 65,000 employees in those countries. The acquisition is its largest since it bought Docks de France in 1996.
It will finance the deal with existing credit lines but is not ruling out a bond issue, said Philippe Baroukh, CEO of Auchan hypermarkets.
The deal does not include the Real businesses in Germany or Turkey. Auchan is not active in Turkey and so was not interested in those stores. Metro's management sees good growth potential for hypermarkets in Turkey and decided to keep them, Koch said, although other parties had been interested in a deal. A source close to the transaction cited Sabanci, Tesco and Koc as being interested.
Asked about the hypermarkets that Carrefour is expected to sell in Turkey, he responded: "We are certainly not a buyer when it comes to international hypermarket operations."
Shares in Metro were down 0.5 percent at 21.5 euros at 1630 GMT, compared with a flat retail sector.
Metro was advised by Goldman Sachs and JP Morgan, Auchan by BNP Paribas. ($1 = 0.7705 euros) (Reporting by Victoria Bryan, Matthias Inverardi and Dominique Vidalon; additional reporting by Arno Schuetze; Editing by Helen Massy-Beresford)