UPDATE 1-Axel Springer prepares IPO for online business - sources
* Holds talks with advisers, no bank mandates yet - sources
* Flotation could come as early as second half - sources
* Digital Classifieds could be valued at 3 bln euros
By Arno Schuetze and Alexander Hübner
FRANKFURT, Feb 7 (Reuters) - German publisher Axel Springer has started preparations to float its online classified advertising unit as it steps up efforts to shift from print to digital media, two people familiar with the situation said on Friday.
Springer, publisher of Germany's best-selling daily Bild, has in the past sold print titles to finance its expansion in electronic content and has acquired several online groups over the past couple of years.
The company is in informal talks with financial advisers on a potential initial public offering (IPO) of its Digital Classifieds unit, but has not yet asked investment banks to pitch for a role in the listing, the sources added.
Private equity firm General Atlantic, which bought 30 percent of Axel Springer Digital Classifieds for 237 million euros ($322 million) in 2012, has an option to float its stake from next year.
An IPO could come as soon as the second half of the year but could also be postponed until 2015, the sources said, adding that a buyback of General Atlantic's stake by Springer also remains an option.
Springer and General Atlantic declined to comment.
Springer was one of the first German companies to make inroads into digital media, away from traditional print products, making headway over bigger peers such as privately held Bertelsmann.
To free up cash for its digital expansion, Axel Springer last year agreed to sell its regional newspapers Berliner Morgenpost and Hamburger Abendblatt, five TV programme guides and two women's magazines, jointly accounting for about 15 percent of group revenues, in a 920 million euro deal.
Springer's digital media offerings account for almost 60 percent of its revenue from continued operations and include web-based versions of its newspaper titles.
Only the Digital Classifieds unit, which includes property and job sites such as SeLoger, ImmoWeb, StepStone and TotalJobs, is being readied for a potential flotation.
While Axel Springer's print activities saw sales and earnings decline in the first nine months of 2013, sales of the digital classified business rose 26 percent to 296 million euros and earnings before tax, interest, depreciation and amortisation (EBITDA) grew 19.5 percent to 121 million euros.
In a deal struck by Hellman & Friedman last year, the private equity firm bought Deutsche Telekom's classified advertising business Scout24 at a valuation of about 20 times its 2013 core earnings.
Assuming a constant growth rate, Axel Springer's digital classified unit could have reached EBITDA of 160 million euros in 2013. Based on the Deutsche transactions, the Axel Springer classified unit could be valued at 3 billion euros.