* CVC has until 1600 GMT Tuesday to decide on firm bid
* Company asked that CVC be given an extension
By Anjuli Davies and Kylie MacLellan
LONDON, May 13 (Reuters) - Private equity firm CVC Capital Partners has been given an extra 24 hours to commit to a firm bid for online gambling company Betfair, in what would be the biggest deal taking a British listed company private in more than a year.
The extension, which required consent from Betfair's board as well as Britain's Takeover Panel, signals the two sides are working together on a mutually acceptable offer, instead of CVC pursuing a hostile bid.
"They are not ready to part but they have not reached an agreement yet," a person familiar with the matter said.
Betfair stock, which was trading at 700 pence before CVC said on April 15 it was considering a bid, closed on Monday at 895 pence. CVC had previously been given 28 days to either make an offer, walk away or extend the deadline.
They now have until 1600 GMT on Tuesday, Betfair said in a statement, an unusually short extension.
"By this time either the co-offerors will announce that they do not intend to make an offer for Betfair or the company will seek a further extension of the deadline," Betfair said in a statement.
On April 22, Betfair rejected a preliminary offer of 880 pence per share from CVC, saying the price was too low and had too many strings attached.
Betfair's technology allows gamblers to bet online against one another at their own prices. It is also offering more conventional sports betting with odds set centrally to compete with rivals in an expanding yet highly competitive sector.
Deals in which a publicly listed company is taken over by a private entity, typically a private equity fund, helped drive a boom in private equity dealmaking in 2006-2007.
They accounted for around half of private equity-backed mergers and acquisitions in those years, according to Thomson Reuters data, but that fell to just 12 percent of the total last year.
The decline was partly a result of the financial crisis, which made it harder to find financing for such deals. Falling valuations also made it less appealing for company owners to sell.
Since Betfair listed in 2010, the stock has tumbled from its debut price of 13 pounds. Analysts said the company had failed to clearly identify whether it was a technology or gambling business.
Under Chief Executive Breon Corcoran, who joined from Irish bookmaker Paddy Power last year, Betfair has withdrawn from markets such as Greece and Germany, where regulations are not clear cut or tax rates are punitive, and has cut 500 jobs to help save 30 million pounds ($46.6 million) in costs.
Faced with the takeover approach, Betfair raised its profit forecast and cost savings targets earlier this month.
CVC, which is the largest shareholder in Formula One motor racing, believes it could turn Betfair around more quickly by taking it private.
CVC often leaves management in place at companies it has acquired. It has joined forces with Richard Koch and Antony Ball, who own 6.5 percent of Betfair.