HeidelbergCement sells building products arm to Lone Star

* Part of Heidelberg's drive to reduce debt

* Price tag $1.4 bln, up to $100 mln hinging on performance

* Buyer Lone Star beat out rival buyout groups - sources (Adds CEO comment, details on deal)

By Ludwig Burger

FRANKFURT, Dec (Shanghai: 600875.SS - news) 24 (Reuters) - Germany's HeidelbergCement has clinched a deal to sell its Hanson Building Products business to private equity firm Lone Star Funds for $1.4 billion to reduce its debt.

Up to $100 million of the takeover price will be payable in 2016, depending on the 2015 performance of Hanson Building Products, whose main markets are in North America and Britain, the German cement maker said on Wednesday.

"This is an important step towards reaching our target financial metrics that are relevant for improving our credit-worthiness," said Chief Executive Bernd Scheifele.

HeidelbergCement (Other OTC: HDELY - news) aims to cut net debt to 2.8 times earnings before interest, taxes, depreciation and amortisation (EBITDA), down from a multiple of 3.1 at the end of September.

Sources close to the matter told Reuters on Tuesday that final bids for Hanson Building, whose products include concrete pipes and clay bricks, were submitted earlier this month and that Lone Star looked set to prevail over other buyout firms in the auction.

HeidelbergCement had also pursued an initial public offering (IPO) for the subsidiary and according to the IPO filing, Hanson Building reported net income of $14.9 million for the six months ended June, on sales of $597.4 million.

The sale is part of Heidelberg's strategy of focusing on raw materials processing for its core products of cement and aggregates and other related products.

The cement maker said it expected the deal to close in the first half of 2015 and that it would use the proceeds to reduce net financial debt, which stood at 7.6 billion euros ($9.3 billion) at the end of September.

Deutsche Bank (Xetra: 514000 - news) , BNP Paribas (Xetra: 887771 - news) and Bank of America Merrill Lynch acted as financial advisers and Shearman & Sterling LLP acted as legal advisor to HeidelbergCement.

For Lone Star, Citi, Credit Suisse (NYSE: CS - news) , and Barclays (LSE: BARC.L - news) acted as financial advisers with Gibson, Dunn & Crutcher acting as legal adviser.

($1 = 0.8197 euros) (Reporting by Ludwig Burger; Editing by Jane Merriman and Mark Potter)