RPT-UPDATE 2-Aston Martin at centre of Italian-Indian bid war

MILAN/MUMBAI, Nov 24 (Reuters) - Aston Martin stands at the

centre of an international takeover battle after Indian motors

group Mahindra trumped an Italian bid for half of the British

luxury car maker.

Italian private equity fund Investindustrial reached an

agreement on Thursday with the owner, Kuwaiti investment house

Investment Dar, but Mahindra and Mahindra made a

higher offer on Friday, leaving the fate of the 98-year old icon

of British motor engineering hanging in the balance, sources

familiar with the discussions said.

Aston Martin makes the cars immortalised by James Bond films

down the decades in Gaydon, Warwickshire, the heartland of

England's early 20th century motor manufacturing heyday.

The company was sold in 2007 by U.S.-based Ford Motor Co.

for 479 million pounds ($767 million), to Kuwait's

Investment Dar and another Kuwait fund, Adeem Investment Co.

The consortium was fronted by David Richards -- former

Formula 1 Benetton and BAR racing boss, who remains chairman.

Aston Martin sells approaching 15 percent of its DB9,

Vanquish and other models in Asia. Wealthy Chinese buyers

snapped up 110 cars in 2010 and sales are expected to have

multliplied five-fold to over 500 this year.

"Talks are continuing through the weekend," said one

source, who said Investindustrial had bid between 200 million

and 250 million pounds ($400 million) for the stake, and is

confident of winning the race because it sees its proposal as

"technically" superior, including a technical partnership deal

with Daimler AG's Mercedes.

The same source said manufacturing would stay at Gaydon

under the Italian proposal.

A spokesman for Investment Dar, which went to the market for

a $1 billion debt restructuring last year, was not immediately

available for comment, nor could Mahindra be reached for

comment. Investindustrial declined comment.

Investindustrial, owned by Italy's Bonomi family, is not new

to luxury motor brands. In 2006, it bought Italian motorcycle

maker Ducati and sold it for about 860 million euros last April

to Volkswagen's Audi division.

Mahindra is the world number one tractor maker. It also

makes more sport utlitiy vehicles than any other Indian motor

manufacturer, and controls South Korean car maker Ssangyong

Motor Co Ltd.

A second source familiar with the process said Mahindra was

keen to access the Aston Martin technology to upgrade its

existing vehicle platform.

Another Indian motor company, Tata Motor, owns British

luxury manufacturer Jaguar Land Rover, and has had even more

success than Aston Martin in China, now Jaguar Land Rover's

biggest market.

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