* Springer sells regional papers, TV guides, women's titles
* Funke Mediengruppe buys assets for 920 mln euros
* Timing fuels speculation before D. Telekom Scout24 auction
* Axel Springer shares up 16.8 percent (Updates with Scout24 bid angle)
By Maria Sheahan and Arno Schuetze
FRANKFURT, July 25 Publisher Axel Springer struck a 920 million euro ($1.22 billion) deal to sell a clutch of Germany's best-known newspaper and magazines, building up a potential war chest to bid for online classified advertising business Scout24.
Deutsche Telekom, which owns Scout24, has asked for tentative bids to be handed in by next Wednesday and expects offers to value the group at no less than 1.5 billion euros ($2 billion), people familiar with the sale process said.
They were speaking after Axel Springer announced on Thursday it was selling 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, to Germany's Funke Mediengruppe.
"It looks like they are raising the necessary cash to buy Scout," one banker said.
With print readership generally in decline, media groups are increasingly moving online for growth. Britain's Daily Mail and General Trust said on Thursday that while revenues from advertising in its newspapers fell 7 percent in the third quarter, they soared 41 percent at the papers' companion websites.
Shares in Axel Springer, the top newspaper publisher in Europe's biggest print media market, surged on news of the deal climbing 16.8 percent to 40.335 euros.
Scout24, a bundle of Internet portals including European car trading site AutoScout24 and real estate classifieds site ImmoScout, could become one of only a few financially successful investments for Deutsche Telekom, which bought it for 180 million euros in 2004 from Swiss private equity firm Beisheim.
Axel Springer, which has tied up with private equity group General Atlantic, is one of the few strategic players taking part in the auction, the sources said.
Other contenders to make it past a pre-qualifying round in June include private equity groups like Hellman & Friedman, Providence, CVC, EQT, KKR, Apax and Silverlake, they added.
Deutsche Telekom is offering a 30 percent stake, but may be lured into selling the whole unit if the price is right, one of the people familiar with the auction said.
Deutsche Telekom, which is being advised by Goldman Sachs and Jefferies, declined to comment, as did Springer and the private equity firms apart from Silverlake, which was not immediately available.
A 1.5 billion euro price tag would value Scout24 at 14 to 15 times earnings before interest, tax, depreciation and amortisation (EBITDA), according to a source familiar with the company. That is below a ratio of more than 20 for peer Rightmove, according to Thomson Reuters StarMine data.
CUTTING OLD ROOTS
In fiscal 2012, the publications Axel Springer is selling generated 512.4 million euros of revenues, and contributed 94.8 million euros to group EBITDA.
Among the titles to be shed is TV guide Hoerzu, a household name across Germany. It became Axel Springer's first major publication in 1946 and was also one of the first publications to be licensed for sale in occupied Germany after World War Two.
Axel Springer created Hamburger Abendblatt, its first daily newspaper, only two years later, followed by Bild and Die Welt in 1952 and 1953. Chief Executive Mathias Doepfner said the Bild and Welt groups were the company's clear focus.
Funke will pay 660 million euros in cash at closing of the deal with Axel Springer or at the latest on June 30, 2014. To cover the remaining price, Axel Springer will grant Funke a vendor loan with a term of several years.
Axel Springer said final contracts would be signed as soon as Funke has agreed the necessary financing, which will likely be in the European autumn.
($1 = 0.7555 euros) (Editing by Mark Trevelyan)