* Last-ditch efforts to sell to Carlyle, PAI failed-sources
* Schneider declines to comment
By Laurence Frost and Soyoung Kim
PARIS/NEW YORK, Oct 19 (Reuters) - French engineering company Schneider Electric has abandoned plans to sell its CST sensors division for around $1 billion, people with knowledge of the matter said.
Schneider pulled the plug after last-ditch efforts to reach a deal with Carlyle Group and PAI Partners failed, two sources said. They asked not to be identified because the discussions were confidential.
Paris-based Schneider had turned back to the private equity firms last month after exclusive negotiations with Singapore's Avago Technologies broke down, the sources said.
Avago had initially bid close to $1 billion for CST, beating out an $850 million offer from Carlyle and PAI, one of the sources said. The negotiations reportedly foundered on the chipmaker's reluctance to take on all of CST's French plants.
Schneider then renewed talks with the two funds but failed to bridge the price gap, they said.
A Schneider spokeswoman declined to comment.
Shares in Schneider were down 1.3 percent at 49.72 euros by 1406 GMT. The stock is up nearly a quarter this year, giving it a market value of some 27 billion euros ($35.35 billion).
The group has tightened its focus on building automation, in a shift away from CST's sensors and actuators for the automotive, aerospace, transport, energy and infrastructure industries.
Schneider had previously attempted to sell CST in 2011, after appointing JPMorgan Chase to handle the disposal, but postponed the sale as volatile financial markets deterred would-be buyers.
The division has 4,700 employees worldwide and recorded $660 million in sales last year.