MILAN Italy's Snam (SRG.MI) has started talks with state lender Cassa Depositi e Prestiti (CDP) to buy the TAG gas pipeline, sources said on Thursday, as it presses ahead with plans to grow its European gas transport footprint.
The deal, valued at around 700 million euros ($918.33 million), would give Snam control over a strategic pipeline that carries Russian gas through Austria into Italy.
Snam, one of Europe's biggest gas transport groups, has a strategic alliance with Belgium's Fluxys (FLUX.BR) and is looking to integrate Europe's patchwork of gas grids.
In April the company reached a final agreement to buy, along with other investors, the TIGF gas transport and storage business of France's Total (TOTF.PA).
"Talks have started," a source with knowledge of the matter said.
A second source said the company was looking to complete the acquisition by the end of this year or early in 2014.
Snam, which has always said TAG would be a good fit for its business, is 30 percent owned by CDP.
TAG is 89 percent owned by CDP while the remainder is owned by Austria's OMV (OMVV.VI).
The second source said the value of the operation should be around the amount paid by CDP for TAG.
CDP completed the acquisition of TAG from Italian oil and gas group Eni (ENI.MI) in 2011 for around 710 million euros.
Snam declined to comment while CDP said it did not comment on market rumors.
($1 = 0.7623 euros)
(Reporting by Stephen Jewkes; editing by Francesca Landini and Elaine Hardcastle)