UPDATE 3-Garmin in talks to buy Britain's Raymarine

* Raymarine in early talks with parties, including Garmin

* Raymarine still exploring sale or fundraising

* Deal to add to Garmin's sales in 2010: analysts

* Raymarine shares soar, Garmin shares falls 3 pct (Recasts; adds Garmin and analysts' comment, background, updates share movement)

By Purwa Naveen Raman and Savio D'Souza

BANGALORE, Aug 17 (Reuters) - U.S. navigation device maker Garmin Ltd (GRMN.O) is in early talks to buy Britain's Raymarine Plc (RAY.L) in a bid to gain market share in Europe.

Raymarine, which makes fishfinders, autopilots, marine radar and GPS systems for leisure boats, and rivals like Garmin and Norway's privately held Navico are struggling to chart a course in a weak economy that has crimped demand for discretionary consumer goods they offer.

"Raymarine gives Garmin the all-important original equipment manufacturer (OEM) footprint," Panmure Gordon analyst Oliver Wynne-James said upgrading Raymarine's stock to "buy" from "hold."

The deal would be worth about 20 million pounds ($32.59 million), or 24 pence per Raymarine share, and probably has "the right magnitude of sweetener" to move talks forward, he said doubling his price target on the stock to that amount.

Raymarine's shares closed 29 percent higher at 16.5 pence on the London Stock Exchange, while Garmin's shares were trading down 3 percent at $27.98 in afternoon trade on Nasdaq.

Wynne-James said there was a slim chance that other interested parties would enter the fray, with the main hurdle being persuading Garmin to pay more than the value of Raymarine's net debt of about 96 million pounds.

Earlier, Raymarine confirmed that it was in early talks with a number of parties, including Garmin, after the British firm's shares surged more than 96 percent on a report that the company had received an approach from Garmin. [ID:nLH416530]

A Garmin spokesperson declined to comment.

The deal, if it went through, was a relatively low-risk consolidation play, cutting out redundant costs, rationalizing overlapping product lines, scaling up manufacturing, and leveraging a newly-expanded channel, said Oppenheimer & Co analyst Yair Reiner.

The deal would lift Garmin's fiscal 2010 earning per share by 15 cent to $2.64, and add $150 million to its revenue, Reiner said.

He estimates that Raymarine and Garmin's marine segment enjoyed similar revenue levels and a market share of about 30 percent each in 2008.