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UPDATE 1-DaimlerChrysler says sells MTU unit to KKR

(Adds details, background, shares)

FRANKFURT, Nov 21 (Reuters) - DaimlerChrylser said on Friday it had sold its MTU aero engine business to U.S. private equity firm Kohlberg Kravis Roberts & Co in the carmaker's latest step to shed non-core assets.

The company gave no price for the sale, but sources close to the deal have said that Daimler would sell the unit to KKR for 1.45 billion euros ($1.7 billion). The deal, reported by Reuters earlier this week, brings to an end a months-long bidding process, in which Doughty Hanson and other private equity houses including The Blackstone Group and Carlyle come in and out of the race. The sale, to be completed by the end of December, will give a welcome boost to the bottom line of the world's fifth biggest carmaker as it struggles to return its U.S. Chrysler unit to long-term profits.

MTU, which makes turbines and other parts for several engine types, is one of the last non-core assets DaimlerChrysler has to sell. The business has over 8,300 employees globally and had sales of about 2.2 billion euros last year.

Daimler said in a statement that MTU would continue its current project and cooperation agreements, notably its strategic alliance with U.S. aero egine maker Pratt & Whitney .

"The sale to KKR gives MTU Aero Engines new possibilities for the future," said DaimlerChrysler in a statement.

Shortly after the news, DaimlerChrysler shares were flat, in line with its European peers .

Daimler is the second European carmaker this year to sell its aero unit to a private equity firm.

In July Italy's Fiat agreed to sell its Fiat Avio aviation unit to The Carlyle Group and state-controlled defence firm Finmeccanica in a bid to cut its heavy debt load.