UPDATE 2-Sensor specialist AMS triggers bidding war for Germany's Osram

(Adds details on bid, reaction from Osram, Bain, Carlyle)

VIENNA, Aug 11 (Reuters) - Austrian sensor specialist AMS triggered a bidding war for Osram on Sunday, saying it was ready to pay $3.8 billion for the German lighting group's shares, 10% more than finance investors Bain Capital and Carlyle have already offered.

AMS is working on reducing its dependency on Apple Inc , which it supplies with sensors for facial recognition technology, and is investing heavily in technology for self-driving cars.

Osram, which is grappling with weakness in the automotive industry and a broader economic slowdown, had sparked bidding interest because of its potential as a supplier for connected and autonomous cars.

Bain and Carlyle's bid of 35 euros per Osram share, expected to conclude on Sept. 5, has the backing of the Munich group's managing and supervisory boards. But Osram's biggest shareholder AllianzGI, which owns a 9.3% stake, and a small shareholders group have rejected the offer as too low.

AMS said on Sunday it had submitted a proposal to Osram for an all-cash takeover offer at a price of 38.50 euros per share. Including debt, the offer values the German group at 4.3 billion euros, it said.

However, to be able to officially make a bid, the Austrian group needs the German firm's consent.

An Osram spokesman said that the group had taken note of the announcement, but had no comment yet. A spokesman for Bain and Carlyle declined to comment.

STANDSTILL AGREEMENT

AMS had already shown interest in Osram in June, and in order to gain access to due diligence it signed a confidentiality agreement which includes a 12-month standstill agreement. AMS had backpedaled within days at the time as it did not have sufficient financing.

It provided a finance plan on Sunday and said it would wait until Aug. 15 for Osram to waive the standstill agreement and then make an offer.

"The proposal is compelling for all stakeholders of Osram," said AMS Chief Executive Alexander Everke in a statement. "Therefore, we trust that Osram will waive the standstill agreement and allow its shareholders to benefit from our offer."

The planned bid includes a 4.2 billion euro bridge loan facility underwritten by UBS and HSBC, which AMS plans to refinance by issuing debt and equity, including raising 1.5 billion euros of new equity, "primarily" through a rights issue.

"The combination of AMS and Osram creates a global leader in sensor solutions and photonics with approximately 5 billion euros of revenue," the group said. "The transaction enables AMS to enhance its sensor solutions and photonics offering in terms of performance, size, energy efficiency and costs."

Analysts have questioned the logic of AMS's interest in Osram, saying the Austrian firm would have to carve out or sell Osram's non-semiconductor operations for a deal to make sense.

AMS said on Sunday that it sees Osram's digital division - part of Osram's attempt to become a high-tech group that builds chips, provides digital lighting systems and supplies sensors and other components - as non-core, adding that it would seek "the best owner" for the division.

($1 = 0.8930 euros) (Reporting by Kirsti Knolle, Francois Murphy in VIENNA, Alexander Huebner in MUNICH and Kanishka Singh in BENGALURU Editing by Keith Weir and Bill Rigby)