* Unclear whether takeover bid will succeed -source
* Battle for Deoleo turned political this week
* CVC offer below market price (Adds details, background, Deoleo results)
By Emma Pinedo and Julien Toyer
MADRID, April 10 The board of Spain's Deoleo , the world's top olive oil bottler, agreed on Thursday to back a takeover bid from British private equity fund CVC Capital Partners.
It was not clear whether the bid would succeed as only two Spanish banks out of the four that were mulling selling their stakes in the firm had eventually agreed to do so, a source with knowledge of the matter said.
The source said the two banks that decided to sell are nationalised lender Bankia and BMN, while Caixabank and Kutxabank preferred to keep their stakes so that Spanish shareholders would retain about a third of the firm.
Other significant Spanish stakeholders in Deoleo, which sells one fifth of the world's bottled olive oil and owns three of the top four brands, Spain's Carbonell and Italy's Bertolli and Carapelli, are Andalusia-based lender Unicaja and olive oil producer Hojiblanca.
Earlier this week, the battle for control of Deoleo turned political as the Spanish government revealed its interest in buying into what it sees as a nationally strategic company.
Of particular concern to Madrid was that one of the bidders for Deoleo was IQ MIIC, a joint venture between Italian state investment fund FSI and its Qatari counterpart.
Other bidders were U.S. private equity firms Carlyle CG.O and Rhone Capital, and France's PAI Partners.
Spain is by far the biggest world producer of olive oil, and the growing industry is a major employer in the country's impoverished south. The government had said that while it would not block foreign takeovers, it did not want to see the company broken up.
Deoleo said in a statement that CVC would first buy a 29.99 percent stake in the firm through the acquisition of the stakes held by significant shareholders, identified by the source as Bankia and BMN, and a capital increase that it would subscribe.
It would later launch a takeover bid for the remaining capital at a price of 0.38 euro per share, below Deoleo's closing price of 0.425 euro per share on Thursday.
The deal, which values the company at around 439 million euros ($609 million) compared to a current market capitalisation of 490 million euros, will also involve the refinancing of Deoleo's debt, the company said.
Another source close to the deal had told Reuters this week that even though CVC's offer was below the market price, it could still tempt more than half of shareholders to sell because of the stock's high rating.
Deoleo is trading at an enterprise value of 9.5 times 12-month core earnings, a premium of 12 percent over the Spanish food sector average, according to Thomson Reuters Eikon data.
Banking sources had also said CVC's offer was attractive because it included recapitalisation and loans to help the company meet big debt maturities over the next two years.
Deoleo ran into problems in 2009 after years of debt-fuelled acquisitions. It has since been recapitalised, and it has cut its debt to around 500 million euros, or six times core earnings, from a previous level of 16 times core earnings.
It posted on Thursday a net profit of 3.6 million euros ($5 million)in the first quarter of 2014 while earnings before interest, taxes, depreciation and amortisation jumped 29.6 percent to 19.6 million euros. ($1 = 0.7204 Euros) (Editing by Anthony Barker)