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TOKYO, April 8 (Reuters) - U.S. private equity fund Cerberus could sell a smaller share of Japanese railway and property group Seibu than planned after investors balked at the proposed price tag for its stock market listing, two people with knowledge of the deal said.
A tentative price for the Seibu share sale was set in March at 2,300 yen per share, valuing the offering at 186 billion yen and the entire company at 787 billion yen ($7.63 billion).
People familiar with the Seibu deal, who asked not to be named because of the private nature of discussions, said underwriters were considering a lower price range.
At the same time, Cerberus could sell fewer of its shares into the offering than the 15.5 percent stake it had previously planned to sell, the sources said. Its current stake is 35.5 percent.
Cerberus and Seibu have set aside differences after a difficult 2013 in which they clashed over when the company should be listed and at what price. The battle included a failed attempt by the U.S. fund to take control of the Japanese company's board.
Their fraught relationship came to symbolise tensions between Japanese companies and foreign investors.
Cerberus led a bailout of Seibu following a scandal involving falsified shareholder records which led to its delisting in 2004. The U.S. private equity company was said to have paid an average of around 1,000 yen for each Seibu share at that time, although the fund has never confirmed its acquisition price.
The Seibu initial public offering price range is due to be announced on Wednesday after a meeting of the company's board. Seibu on Monday delayed the price announcement by two days.
Both Cerberus and Seibu declined to comment.
Cerberus has also made it clear that it would rather sell less of its stake in the IPO than accept a sharply lower price, the people involved in the discussions said.
A delay or cancellation of the sale appears unlikely, as both Seibu and Cerberus have been intent on taking the shares public and eventually parting ways, they said.
$1 = 103.1250 Japanese Yen Editing by Jane Merriman