UPDATE 1-Swedish Match sells S.African ops to Philip Morris

* Sells S. African ops to Philip Morris for 1.75 bln rand

* Says deal to be complete in the second half of 2009

* Says capital gain on sale about 500-600 mln SEK

(Adds detail, background)

STOCKHOLM, July 2 (Reuters) - Swedish Match (SWMA.ST) said on Thursday it had agreed to sell its South African operations to Philip Morris International (PM.N) for 1.75 billion rand ($224.7 million).

The Swedish tobacco products maker said in a statement the deal would be complete in the second half of 2009 and was subject to approval by South Africa's competition authority.

"This agreement with Philip Morris International is in line with Swedish Match's strategy to focus on smokefree tobacco, cigars and lights products," said Swedish Match Chief Executive Lars Dahlgren.

"SMSA (Swedish Match South Africa) will continue to be a strong player in South Africa and we believe that PMI will benefit significantly from its deeply-entrenched and highly-recognized brands and its dedicated people." A company spokesman said Swedish Match estimated the capital gain on the sale of the business at abuot 500 million Swedish crowns to 600 million Swedish crowns ($65.89 million to $79.07 million).

The firm said SMSA will continue to distribute lighters, matches and cigars for Swedish Match. ($1=7.788 Rand) ($1=7.588 Swedish Crown) (Editing by Hans Peters)