EQT leads bidding for stake in prosthetics maker Ottobock - sources

FRANKFURT, May 23 (Reuters) - Buyout group EQT has emerged as the leading bidder for a stake in Germany's Ottobock, the world's largest maker of artificial limbs, as talks with rival investor CVC (Taiwan OTC: 4744.TWO - news) continue, people familiar with the matter said.

The investors have each made an offer to take a 20 percent stake in Ottobock's core healthcare division as part of efforts to prepare the company for an eventual stock market listing, the people said.

Ottobock, which was founded in 1919 as a maker of prosthetics for World War One veterans, said in January it was worth about 3 billion euros ($3.4 billion) and was being advised by JP Morgan on the sale.

The field of bidders has since narrowed down to just EQT and CVC, the sources said.

While EQT is seen as having an edge in striking a deal with the private company owned by its founder's grandson Hans Georg Naeder, the talks are not exclusive and may still fall apart, the people said.

Ottobock, an official partner of the International Paralympic Committee, is seeking financial backing to develop more bionic devices, prosthetic limbs and orthotic braces closely modelled on natural mechanisms.

The deal would help it to pursue "even quicker profitable growth and groundbreaking innovations for the people suffering a handicap", Naeder said in the statement at the time.

The 3 billion euro valuation represents a multiple of 12 times the company's expected 2017 earnings before interest, tax, depreciation and amortisation of 250 million euros.

That's a discount to some rivals as the business includes lower-margin wheelchairs. Iceland's Ossur, for example, trades at 17 times expected core earnings.

EQT and Ottobock declined to comment while CVC was not immediately available for comment.

The company has said in the past it wanted to go public in 2018/19, possibly floating a stake of 25 percent with Naeder staying in control. It has declined to provide a more specific timeline for the initial public offering. ($1 = 0.8884 euros) (Reporting by Arno Schuetze; editing by David Clarke)