RPT-UPDATE 1-E.ON set to sell its German power grid -sources

(Repeats with new Reuters story code)

* E.ON talks to TenneT, group of financial investors-sources

* Group has Deutsche Bank, Goldman Sachs, Allianz-sources

* E.ON may sell German power grid as early as Monday-source

* Bids value grid at about 1 bln eur-sources

* Shares drop as much as 1.4 percent

(Adds background, detail)

By Peter Dinkloh and Tom Kaeckenhoff

FRANKFURT, Nov 6 (Reuters) - Germany's E.ON AG (EONGn.DE), the world's largest utility, is set to sell its German long-distance power grid, four people with knowledge of the matter said, ending years of wrangling with the European Commission.

E.ON is in advanced talks with Dutch grid operator TenneT as well as a consortium of Goldman Sachs (GS.N), Allianz (ALVG.DE) and Deutsche Bank (DBKGn.DE) about the sale of its 11,000 kilometres of high-voltage electricity grid, the sources told Reuters on Friday.

E.ON had committed itself to selling the power grid in February last year, breaking away a united front of German utilities against plans of the EU's executive arm to force German utilities to do the same.

A sale would result in the first German long-distance power grid -- vital to transport power to distributors and industrial users -- being operated separately from power stations in the region of the grid.

The bids value the grid, which runs from the Danish border in the north to the Austrian border in the south, at about 1 billion euros ($1.5 billion), the sources said.

One of the people involved in the process said that the sale might be decided as early as Monday.

All of the parties involved declined to comment.

The sale of the grid most will likely comes almost simultaneously as the sale of Vattenfall's [VATN.UL] power grid in eastern Germany, which borders E.ON's grid.

The consortium of Goldman Sachs, Allianz and Deutsche Bank is also in final talks to buy Vattenfall's power grid, people with knowledge of the transaction have told Reuters. [ID:nWEA8407]

The grid also borders TenneT's grid in the northwest, enabling both potential buyers to combine the grids and cut costs.

E.ON shares dropped as much as 1.4 percent after the news and were down 0.2 percent at 26.23 euros at 1449 GMT, while the German benchmark index DAX .GDAXI was up 0.1 percent. ($1=.6722 Euro) (Additional reporting by Philipp Halstrick in Frankfurt; editing by Karen Foster)