(Adds quotes, details, shares)
LONDON, May 20 (Reuters) - British engineering firm GKN said on Thursday it was in talks to pull out of helicopter maker AgustaWestland by selling its half stake to Italian partner Finmeccanica .
GKN's stake in the world's second largest helicopter maker by revenues has been estimated at 800-900 million pounds ($1.41 billion-$1.59 billion) by analysts, some of whom say Finmeccanica could pay more as the deal would give it total control.
"It is now timely to advise shareholders that negotiations are in progress concerning the possible sale of GKN's 50 percent shareholding in AgustaWestland to Finmeccanica," Chairman David Lees said in a statement for GKN's annual general meeting.
"A further announcement will be made when appropriate," he said.
A deal should be sealed by the end of June, a source close to the operation told Reuters.
A Finmeccanica spokesman declined to elaborate on the possible sale, which was mooted in a Goldman Sachs research report more than a week earlier.
Comments by Lees, including an outlook for a year-on-year fall in half-year underlying profit, hit GKN shares, which fell more than six percent.
Lees said group pre-tax profit before goodwill and exceptional items in the first half of 2004 was likely to be "somewhat below" that of last year.
The shares were off 2.17 percent at 214 1/2 pence as of 1054 GMT, while the FTSE 100 index was off 0.88 percent.
Finmeccanica was down 0.25 percent at 0.588 euro.
The stake sale would generate cash for new acquisitions by GKN, which has been mooted as a possible buyer of Boeing Co factories in Kansas and Oklahoma expected to fetch as much as $3 billion.
GKN, which has been mum on the possible deal, bought a Boeing plant in St Louis, Missouri, in 2001.
The plant in Wichita, Kansas, would be by far its largest move into the U.S. market.
AgustaWestland makes civil and military helicopters. Though it narrowly trailed Eurocopter in 2003 revenues, it was more profitable.
($1=.5659 Pound)
(Additional reporting by Jason Neely)