UPDATE 2-Yamana adds cash to sweeten hostile Meridian bid

(Adds Meridian response, analyst comments, stock prices)

By Susan Taylor

OTTAWA, Sept 20 (Reuters) - Yamana Gold (YRI.TO: Quote, Profile, Research, Stock Buzz) sweetened its hostile takeover offer for Meridian Gold MNG.TO on Thursday, hiking the cash consideration by 62.5 percent, cutting the minimum tender and again extending the deadline.

Acquisition-hungry Yamana has increased the cash component of its offer by C$2.50 a share to a total of C$6.50 a share, leaving the share component of the offer unchanged at 2.235 Yamana common shares for each Meridian share.

That puts the deal value at about C$3.6 billion based on Yamana's share price, which pushed up 33 Canadian cents to C$12.98 in Toronto.

"The baby steps, of slowly increasing the bid, are over. This is a big jump and they're nearly doubling the original cash offer," Wellington West analyst Catherine Gignac said in an interview.

"Meridian's board would be mad if they did not come back and say this confirms what we've been telling our shareholders, that we think our stock is of high quality, high value."

Yamana also reduced the minimum tender condition for its Meridian bid to 50.1 percent from two-thirds of shares outstanding and extended the offer deadline to 8 p.m. (2400 GMT) Oct. 2 from 8 p.m. Sept. 24.

"Yamana's sweetened bit for Meridian should be enough to win the day," Blackmond Capital analyst Richard Gray said in a note.