PZU, eastern Europe's biggest insurer, is close to acquiring Lithuanian rival Lietuvos draudimas from British group RSA in a deal valued at around 100 million euros ($139 million), sources with knowledge of the matter said on Monday. Last month Lithuanian media reports said that the PZU, the Polish state-controlled group, was bidding in competition with Austria's Vienna Insurance Group but PZU offered better conditions.

"PZU is close to agreeing the purchase. Official information may follow soon," one of the sources said.

"The deal is in the final straight", another source said.

Lietuvos draudimas has said that RSA has made no official decision but according to local media the troubled British insurer has been considering various options to spin off the unit.

Last month RSA moved to restore its capital position, setting out plans to raise 773 million pounds ($1.3 billion) via a fully underwritten rights issue.

PZU, which operates in Lithuania via its subsidiary PZU Lietuva, declined to comment. No one at Lietuvos draudimas or VIG was immediately available for comment.



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POLAND's PZU close to buying RSA's Lithuanian insurer