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Buyout group Cinven raises offer for Telekom Slovenia - source

* New (KOSDAQ: 160550.KQ - news) offer could be worth 1.2 bln eur including debt -source

* Telekom Slovenia shares close up 4.8 percent

* Politicians had said previous offer was too low (Adds valuation compared with peers)

By Arno Schuetze and Marja Novak

FRANKFURT/LJUBLJANA, May 20 (Reuters) - Buyout group Cinven has raised its offer for state-controlled Telekom Slovenia in an attempt to win over Slovenian authorities facing criticism they could be selling on the cheap, according to a person familiar with the transaction.

Cinven, the only bidder for the telecoms operator, hiked its offer to 130 euros a share. Previously it had offered only about 110 euros, sparking doubts over whether the deal would be completed as many Slovenian politicians opposed a sale at that price.

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"Negotiations have ended, a final offer has been submitted," the source said on Wednesday.

Slovenian state investment fund SDH, which is coordinating the sale, said the talks with the bidder had not been completed and no decision had been taken. Last month it said negotiations on the sale were expected to end in May.

The offer consists of an upfront cash payment of 110 euros a share, an additional payment of 15 euros a share depending on the outcome of ongoing litigation at Telekom Slovenia and an additional 5 euros a share depending on the company's performance, the source said.

If the full 130 euros a share are paid out, the deal has a value of 850 million euros ($943 million), or 1.22 billion euros including debt.

The latter figure equals 6.2 times Telekom Slovenia's 198 million euros in expected earnings before interest, taxes, depreciation, and amortization for 2015.

Peers, such as Telekom Austria (Other OTC: TKAGY - news) , Magyar Telekom , O2 Czech Republic (Other OTC: TFATF - news) or Orange Polska , trade at an average multiple of roughly 5 times their expected earnings.

In Deutsche Telekom's acquisition of the 49-percent stake of Slovak Telekom that it did not already own, it paid a multiple of 3.8 the group's expected earnings.

Shares (Frankfurt: DI6.F - news) of Telekom closed up 4.8 percent at 109 euros, outperforming the country's blue-chip SBI index which gained 0.5 percent.

The company, which has a market value of around 712 million euros, is the largest of 15 firms earmarked for privatisation in 2013. So far, four of those firms have been sold.

Several competitors have filed lawsuits against Telekom Slovenia for alleged abuse of its quasi-monopolistic position in recent years. Analysts estimate that, in a worst case scenario, the group may have to pay up to 100 million euros to resolve ongoing litigation.

($1 = 0.9016 euros)

(Editing by David Holmes and Pravin Char)