UPDATE 1-Catalina to be acquired by private equity firm

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NEW YORK, April 17 (Reuters) - Catalina Marketing Corp. POS.N said on Tuesday it agreed to be acquired by private equity firm Hellman & Friedman for $32.50 per share, which topped an earlier bid for the marketing services company.

The deal, valued at $1.7 billion including about $136 million of debt, is 40 cents per share higher than the bid made by Catalina's largest shareholder, ValueAct Capital.

Catalina said it terminated its earlier merger deal with ValueAct and paid an $8.44 million termination fee as required by the terms of that agreement.

Shares of Catalina, based in St. Petersburg, Florida, rose 15 cents to $31.90 on the New York Stock Exchange.

Catalina hired Goldman Sachs in December as private equity firms prepared bids for the company. A Catalina special committee retained Lazard to assist it in connection with its deliberations.

Last month, it announced plans to be purchased by ValueAct, a buyout firm co-founded by Catalina director Jeffrey Ubben, for $32.10 per share but terminated that deal to go private with Hellman & Friedman.

Catalina, which concentrates on consumer behavior and direct marketing, posted revenue of $123.1 million in the quarter ended Dec 31., up nearly 27 percent from the year-ago period.

Among other things, Catalina also provides marketing services to companies based on the information from its electronic network, which collects data from the checkout scanners of about 21,000 retail centers in the United States.

The bid by Hellman & Friedman represents a premium of slightly more than 2 percent to the closing price on Monday, but a 34 percent premium over the closing share price on Dec. 7, 2006, when talk of a buyout was first reported.

Catalina has agreed to pay a termination fee of $50.6 million if it ends the deal with Hellman & Friedman, it said.

The deal is expected to be completed in the third quarter. (Additional reporting by Anup Roy in Bangalore)