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* Sales process to start after more restructuring
* Thyssen may keep the asset if offer prices too low
* VDM may be valued at more than 500 million euros
By Arno Schuetze
FRANKFURT, July 24 (Reuters) - German steelmaker ThyssenKrupp has picked Deutsche Bank to manage the sale of its high-performance alloy unit VDM, as it renews efforts to draw a line under an ill-fated venture, two people familiar with the matter said.
The sale process is not expected to start until more restructuring measures have been taken at VDM. Thyssen may even decide to keep the asset if offer prices remain significantly below its book value, the people added.
VDM, which expects earnings before interest, taxes, depreciation and amortization of between 60 million euros ($80.7 million) and 70 million this year, may be valued at more than 500 million euros in sale, the people added.
ThyssenKrupp was forced to take back VDM and Italian steel plant Terni - valued at a combined 950 million euros - from Finland's Outokumpu last year.
It had sold its stainless steel business Inoxum - which included the two units - to Outokumpu in 2012, but the Finnish group almost bankrupted itself in the process.
ThyssenKrupp and Outokumpu, like other steelmakers in Europe, have faced weak demand as construction and metal engineering customers have held back purchases.
Outokumpu said on Thursday it expected its operating loss to widen in the third quarter due to slow summer sales in Europe.
Thyssen will publish third-quarter earnings on Aug. 14.
Last week, Thyssen presented a revamp plan for the Terni plant that entails cutting about 550 jobs and 100 million euros in annual costs for the loss-making site.
Outokumpu itself had also tried to sell VDM. Private equity investors such as Lindsay Goldberg, KPS Capital, Triton, Pamplona and Advent had shown interest in the asset.
The same list of bidders may again look at the asset, as may Europe's third-largest stainless steelmaker Aperam and Russian tycoon Viktor Vekselberg, owner of Swiss steelmaker Schmolz + Bickenbach, one of the sources said.
VDM has about 2,000 employees and offers metal products such as nickel alloys, titanium alloys or special stainless steels, used in highly corrosive environments such as in chemicals processing and the oil and gas sector.
VDM was created as Vereinigte Deutsche Metallwerke in 1930 by a merger of two German metal groups. In 1988, it was bought by Krupp, the steelmaker which eventually merged with Thyssen.
ThyssenKrupp, VDM, Deutsche Bank and the potential buyers declined to comment, except for Renova and KPS, which were not immediately available for comment. ($1 = 0.7434 Euros) (Additional reporting by Silvia Antonioli and Tom Käckenhoff; Editing by David Holmes)