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Berlusconi-backed MFE sweetens cash offer for Spanish TV unit

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MILAN/MADRID (Reuters) -Italy's top commercial broadcaster MediaForEurope (MFE) increased the cash part of its offer for its Spanish-listed unit by 16.1% as it seeks to win investor backing for its plans to create a European-TV group.

Controlled by the family of former Italian Prime Minister Silvio Berlusconi, MFE sees combining its Italian and Spanish businesses as a first step of such a strategy, seeing it as a way to counter competition from online and streaming giants.

Previously known as Mediaset, MFE raised the cash portion of its offer on Monday to 2.16 euros for each Mediaset Espana share from 1.860 euros initially proposed in March when it announced a bid for the 44% stake in the subsidiary it does not already own.

MFE confirmed it would offer 4.5 newly-issued ordinary A shares for each Mediaset Espana share and said Mediaset Espana was now recommending MFE's offer.

"We think that the improvement ... could persuade Mediaset Espana shareholders to adhere to the offer," Intesa Sanpaolo analysts said in a report.

The move increases the value of the cash component of the deal to 300 million euros from 258 million euros.

It comes after MFE lowered the minimum acceptance threshold in its buyout offer and following a nearly 40% drop of MFE A shares since the offer was launched, which had shrunk the potential premium for investors tendering their shares.

The improved offer values each Mediaset Espana share at 4.5 euros at current share prices, with Mediaset Espana stock trading at 4.22 euros by 0840 GMT on Tuesday.

Mediaset Espana shares have fallen 14% since the bid was announced.

MFE also said it would file to the Spanish regulator the authorisation request to modify the offer no later than Tuesday.

Analysts expect the regulator to suspend the ongoing bid, which was due to end on June 28, to assess the revised terms.

(Reporting by Francesca Landini and Elvira Pollina in Milan and Jesús Aguado in Madrid; Editing by Keith Weir and Edmund Blair)

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