UPDATE 1-Utd Internet in last-minute move for freenet deal

(Adds United Internet comments, background)

By Philipp Halstrick

FRANKFURT, April 27 (Reuters) - German Internet service provider United Internet (UTDI.DE: Quote, Profile, Research) said it may raise its offer for rival freenet (FNTG.DE: Quote, Profile, Research) to 16 euros a share, seeking to scupper a freenet move which would derail the takeover bid.

"We consider a price of 16 euros a share feasible, based on what we know as of now and considering the planned acquisition of stakes from institutional investors," United Internet said in a letter obtained by Reuters.

United Internet indicated it would raise its bid after initially offering 12.80 euros per share as it won approval from more investors for the deal, it said in the letter dated Sunday.

The letter came hours ahead of a possible billion-euro takeover planned by freenet, which would scupper United Internet's bid plans.

Freenet plans to buy rival Debitel, owned by private equity firm Permira [PERM.UL]. Two sources with knowledge of the matter said freenet plans to finalise the acquisition later on Sunday.

A person close to the matter said earlier this month Debitel is valued between 1.4 billion and 1.8 billion euros.

United Internet said in the letter it has expressions of interest from eight institutional investors to sell their shares to United Internet, giving the latter and partner Drillisch control of over 58 percent of freenet.