Rexam in advanced talks with Montagu over packaging unit -sources

(Clarifies deal is for the bulk of the business, remainder sold separately)

FRANKFURT, Jan 9 (Reuters) - Montagu Private Equity has entered advanced talks with Rexam (LSE: REX.L - news) to buy the bulk of the British beverage can maker's healthcare packaging unit, three people familiar with the transaction told Reuters.

The deal is likely to be announced this month, one of the sources said, with the part of the business that makes prescription retail products and devices expected to be valued at about 500 million pounds ($823 million).

The small remaining part of the division - supplying containers and closures - is being sold off separately, another source said.

Rexam and Montagu declined to comment.

Rexam said in June that it would sell its healthcare business, which makes medical packaging and drug delivery devices such as bronchial inhalers and injection syringes and accounts for about 10 percent of group sales.

It is selling the healthcare unit to focus on its core business of making beverage cans.

Initially several other peers and private equity firms had put in bids.

But Germany-based Gerresheimer (Xetra: A0LD6E - news) said early December that it is not interested in buying the asset.

Contender Berry Plastics and other buyout groups also dropped out of the race as their bids came in too low, the source said.

A successful sale of the healthcare division would follow that of Rexam's underperforming personal care business in July last year, which makes packaging for cosmetics and toiletries, for $709 million in two parts.

Private equity firm Sun Capital Partners agreed to buy the cosmetics, toiletries and household care division for $459 million, while Silgan Holdings (NasdaqGS: SLGN - news) acquired the high-barrier food packaging business for $250 million. ($1 = 0.6072 British pounds) (Reporting by Arno Schuetze and Anjulie Davies; Editing by Elaine Hardcastle and David Goodman)