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UPDATE 1-India's Mahindra mulls bid for Kone tractor unit

(Changes dateline, adds Kone and analyst comment, share price)

BOMBAY/HELSINKI, Aug 18 (Reuters) - India's largest maker of tractors and utility vehicles Mahindra & Mahindra Ltd said on Monday it may join a bidding contest for tractor maker Valtra, which Finnish engineer Kone plans to divest.

The directors of Mahindra & Mahindra will meet on August 21 to consider a bid for Valtra's Finnish and Brazilian operations -- Valtra Oy Ab and Valtra do Brasil Ltd -- the Bombay Stock Exchange said. Valtra has factories in both countries.

A Kone spokesman declined to comment on the news.

Analysts said Mahindra's interest in Kone was not a major surprise, as several companies had been expected to consider buying the tractor company, which two analysts valued on Monday at around 350 million to 450 million euros ($390-$500 million).

"It has been all the time clear that Valtra is tempting for a manufacturer that wants to strenghten its position in Europe or that wants to enter the European markets," said analyst Jarkko Nikkanen from Opstock Securities.

He rates Kone's stock as "reduce".

At 1155 GMT, Kone shares were trading 1.35 percent higher at 41.25 euros, after hitting a lifetime intraday high of 41.30. The stock has jumped more than 40 percent this year.

Last week, Finland's national broadcaster YLE reported a group of Finnish private investors was expected to join with a state agency in a bid for Valtra.

Kone put its Valtra and Forest Machines unit up for sale in June as part of a plan to focus on core businesses such as elevators and to reduce its debt.

Valtra, the market leader in tractors in the Nordics and number three in Latin America, had 2002 net sales of 762 million euros. (Additional reporting by Giri Venkatesan in Bombay)