Steinhoff and Fnac battle for rival Darty

* Steinhoff offers 160 pence per Darty (LSE: DRTA.L - news) share in latest offer

* Fnac offers 153 pence per Darty share in latest offer

* Darty shares surge 23 pct after 4 sweetened offers in one day (Adds latest bid by Steinhoff, shares, analyst)

By Dominique Vidalon and Tiisetso Motsoeneng

PARIS/JOHANNESBURG April 21 (Reuters) - The battle for Europe's third-largest electrical goods retailer Darty (Euronext: DRTY.NX - news) intensified on Thursday as South Africa's Steinhoff and French rival Fnac frantically tried to outbid each other.

Five new offers in less than 24 hours lifted Darty shares by more than 23 percent to their highest level since the end of 2010 and left Steinhoff in front with a cash offer of 160 pence per share, valuing Darty at 860 million pounds ($1.2 billion).

Darty is attracting the suitors for different reasons. French company Fnac has a large chunk of sales in areas such as books and CDs and needs to diversify into other product lines.

For Steinhoff, the deal would help it bulk up in Europe, where it already makes more than two-thirds of its 9.8 billion euros ($11 billion) of annual sales, at a time its markets in South Africa are deteriorating.

"It (Other OTC: ITGL - news) 's a good time for Darty shareholders. Both bidders are eager to get their hands on its assets. Let's say there is more upside than downside," Liberum analyst Wayne Brown said.

Darty shares traded at 162 pence at 1500 GMT in London, off the day's high of 163.75, but still suggesting some investors were expecting a little more to come.

Fnac first approached Darty back in September and by November the two French companies had struck a cash and paper deal valuing the shares at 105 pence. But Steinhoff crashed the party in March, trumping Fnac with a 125 pence bid.

Just last week, Fnac urged Darty shareholders not to take any hasty action while it considered its options.

But the South African retailer stepped up the pressure late on Wednesday by sweetening its initial offer of 138 pence, unleashing a tit-for-tat bid battle on Thursday.

BIDDING FRENZY

Fnac kicked off first thing with a bid valuing the shares at 145 pence, Steinhoff responded with 150 pence, Fnac came back to the table with 153 pence, only for Steinhoff to hit back with its 160 pence offer.

Darty shares have now doubled in value from 81 pence before Fnac made its approach public in September.

Darty earns 70 percent of its revenue in France but has 400 stores across Europe and competes with Media-Saturn, owned by Germany's Metro (Other OTC: MTRAF - news) , and Britain's Dixons.

Like Darty and Fnac, Steinhoff's existing French retailer Conforama has a strong presence in French high streets and retail parks.

The bidding frenzy also came a week after Vivendi (LSE: 0IIF.L - news) , led by French billionaire Vincent Bollore, spent 159 million euros to buy 15 percent of Fnac, giving the French retailer more financial muscle to take on Steinhoff.

Vivendi Chief Executive Arnaud de Puyfontaine told an annual shareholders meeting on Thursday that Vivendi would support Fnac's management regardless of the outcome of the retail chain's offer on Darty.

Steinhoff is a 21 billion euro company listed in Johannesburg and Frankfurt. Its biggest shareholder is South African retail mogul Christo Wiese, who is also a board member.

($1 = 0.6978 pounds)

($1 = 0.8860 euros) (Editing by David Clarke)