TPG and Goldman Sachs's private equity arm are close to a deal to buy Ontex, the European private-label diaper maker, from buyout firm Candover for 1.2 billion euros ($1.5 billion) or more, people familiar with the matter said.

The parties hope to conclude a deal this week, although talks could still break down, the people added.

The possible sale of Ontex, which competes with Procter & Gamble's Pampers diaper brand, was first reported by the Sunday Telegraph.

TPG, the U.S. buyout firm, has all but held off from European dealmaking for several years, but last month struck a 300 million pound ($464 million) deal to buy British fashion retailer Republic.

People familiar with the matter say TPG is also working on a joint bid with Clayton, Dubilier & Rice for Royal Bank of Scotland's 2.5 billion pound payment-processing business, known by its WorldPay brand.

Candover, Goldman Sachs and TPG declined to comment.

(Reporting by Quentin Webb, editing by Michael Shields)