Sale of Kirch's Springer stake near

Bild, Germany's top selling newspaper, is published by Axel Springer

FRANKFURT, Germany -- State-owned Bavarian bank BayernLB is close to reaching a deal with two U.S. investment banks to buy struggling KirchGruppe's stake in German publisher Axel Springer Verlag.

BayernLB said on Friday it would team up with Lehman Brothers and J.P. Morgan to purchase Kirch's 40-percent holding in Axel Springer, a family controlled company that publishes Germany's top selling newspaper Bild Zeitung.

"The three banks have agreed a takeover of the 40 percent stake and will also take part in a planned stock market placement," a spokesman for BayernLB told Reuters.

The spokesman also said Friede Springer, who heads the Springer family, would increase her stake in the company by 5 percent to 55 percent.

A final agreement on the sale -- which is being handled by Commerzbank and also includes Dresdner Bank -- is expected next week once all five banks have decided on how they will divide their share of Springer.

Commerzbank said Kirch's stake in Springer would probably be sold for less than 900 million euros ($818.2 million), below an original target of about 1 billion euros.

Kirch could not be reached by CNN for comments on Friday.

The 40 percent stake in Springer is owned through the holding company KirchBeteiligung. Springer also publishes the daily newspaper Die Welt as well as the TV guide HoerZu.

Friday's announcement comes just two days after debt-laden KirchGruppe said its pay-television unit, KirchPayTV, had filed for insolvency following failed talks to renegotiate costly film and sports contracts or find fresh funds for its ailing operations.

In April, KirchMedia -- the group's main business unit -- filed for insolvency after the group failed to reach agreement with creditor banks and minority shareholders on plans to reduce its debts of about 6.5 billion euros.