FRANKFURT - Bayer is in advanced takeover talks to expand its animal health unit and is likely to benefit from the ongoing overhaul of the U.S. healthcare sector, a German newspaper said.

Bayer, Germany's largest drugmaker, is among the suitors vying for animal health businesses that are coming to market as a result of antitrust concerns about mergers among U.S. drug majors, Financial Times Deutschland (FTD) reported.

FTD cited financial market sources and people at Bayer's animal health unit.

A Bayer spokesman declined to comment when contacted by Reuters.

Bayer's management told analysts at a meeting last month that its animal health division was among the businesses that could benefit from acquisitions.

Chief Executive Werner Wenning earlier this year ruled out takeovers worth more than 1 billion euros ($1.40 billion) in 2009.

Signs of imminent divestments in the animal drugs industry are abundant. Merck & Co said in June it was exploring exiting its animal-health venture with Sanofi-Aventis (SASY.PA) or -- as part of the planned merger with Schering-Plough -- selling a similar unit at the takeover target.

In March, The Wall Street Journal cited a Pfizer executive as saying that the drug giant may have to shed some of its animal health business to gain antitrust clearance for its planned purchase of Wyeth (WYE.N). ($1=.7163 Euro) (Reporting by Ludwig Burger and Frank Siebelt; Editing by Jon Loades-Carter)

Germany