Wal-Mart eyes bid for Indonesia Matahari units-sources

* Strong line-up for Matahari assets

* Bankers estimates deal to fetch between $800 mln-$1 bln

* Matahari shares up 70 pct in 2010, outpacing broader market

Wal-Mart Stores Inc (WMT.N), the world's top retailer, has joined the race to buy Indonesian retailer Matahari's (MPPA.JK) hypermarket business, stirring up competition for the $1 billion auction in Southeast Asia's biggest economy.

Wal-Mart is stepping up international growth especially in the wake of more than a year of declining U.S. same-store sales at its namesake stores.

Sources told Reuters on Thursday that Wal-Mart has hired Barclays Capital (BARC.L) to advise it on the transaction. The mandate is a coup for Barclays, which is building up its investment banking business.

Matahari is selling Hypermart, Indonesia's second-biggest hypermart chain after PT Carrefour Indonesia, to focus on its core healthcare and property assets.

One banker said he expects the deal to fetch between $800 million to $1 billion.

Wal-Mart is expected to compete in the auction with South Korea's Lotte Shopping (023530.KS) and private equity fund Carlyle Group [CYL.UL].

The auction provides an opportunity to buyout funds and global and regional retailers to get a foothold in Indonesia, where consumer spending is expected to rise alone with strong economic growth.

Matahari shares are up about 70 percent in 2010, reflecting some of those growth expectations, far outpacing a 42 percent rise in benchmark Jakarta stock index. 

It was unclear whether Wal-Mart had submitted a formal offer. Sources previously told Reuters that Lotte and Carlyle have submitted first-round bids. Source were not allowed to speak on the record because details of the auction remain private.

Wal-Mart did not respond to phone calls seeking comment, while Barclays Capital declined to comment.

Bank of America (BAC.N), which is advising Matahari on the deal, was not available for comment.

A strong line-up for Matahari's auction comes ahead of Friday's deadline set by French retailer Carrefour (CARR.PA) for the planned sale of its Southeast Asian assets in a $1 billion deal.

Japan's biggest retailer Aeon Ltd (8267.T) and private equity group Navis Capital are likely to submit second-round bids, sources previously told Reuters. Source: Reuters