UPDATE 2-Sapporo considering management buyout-report

(Updates with closing share price)

TOKYO, Feb 21 (Reuters) - Japanese brewer Sapporo Holdings (2501.T) is considering a management buyout to counter a possible takeover attempt by U.S. hedge fund Steel Partners, Kyodo news agency reported on Wednesday.

Kyodo said Sapporo was also considering buying back the shares already held by Steel Partners, which last week announced that it may launch a tender offer to raise its stake in Sapporo to 66.6 percent from about 18.6 percent. Sapporo spokeswoman Momoko Matsumura denied the report, saying the company is not considering either option. She said it is drawing up a list of questions for Steel Partners on details of its proposal, which will be sent to it by March 1.

Sapporo shares fell 0.9 percent to 889 yen by the close, still 7.8 percent higher than the fund's offer price of 825 yen. At the current price, Sapporo would need 337.5 billion yen for the entire company and 63 billion yen to buy back the stock held by Steel Partners.

Sapporo shares have jumped more than 12 percent since Steel Partners announced its takeover attempt, adding some 37 billion yen to the company's value.

Japanese media have reported that rival brewers Asahi Breweries (2502.T) or Kirin Brewery (2503.T) may seek tie-ups with Sapporo to boost their presence in the flat domestic beer market while enabling Sapporo to avoid a Steel Partners takeover.

Kyodo said Sapporo management had started studying the option of a management buyout because an alliance with another brewer would likely force it to consolidate production facilities.

Mizuho Corporate Bank, a unit of Mizuho Financial Group Inc. (8411.T) and Sapporo's main lender, intends to offer assistance if Sapporo decides to conduct a buyout, Kyodo said. Mizuho Securities is advising Sapporo.

((Reporting by Nathan Layne and Sachi Izumi, editing by Hugh Lawson; Reuters Messaging: nathan.layne.reuters.com@reuters.net; +81-3-3432-8231; nathan.layne@reuters.com))

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