PARIS - Private equity firm KKR has entered into exclusive talks to buy a majority of French fashion brands Maje, Sandro and Claudie Pierlot, according to a source familiar with the transaction.

The acquisition of the brands, partially owned by LVMH (LVMH.PA) Chief Executive Bernard Arnault, would give them an enterprise value of 650 million euros, the source said.

Typically in French takeovers 'exclusive negotiations' to acquire an asset signal that a deal is done, but formal closure is subject to review by the target's works council.

The auction of the three labels, known for their trendy and affordable ready-to-wear garments, has generated a lot of interest in the clothing sector, partly because of a dearth of similar small and successful fashion brands available to investors.

KKR rival Carlyle was the runner-up in the process, in which French private equity firm Eurazeo and Hong Kong-based holding company Swire Pacific were also contenders, the source said.

KKR officials could not immediately be reached for comment. A spokesman for Arnault declined immediate comment.

The brands, which together operate about 500 stores, mainly in Europe, are looking to pursue an expansion in markets like Asia after sales growth of more than 20 percent in recent years.

Arnault's L Capital owns half of the 51 percent stake being sold, with Florac, an investment fund controlled by Marie-Jeanne Meyer, the former head of trading group Louis Dreyfus, controlling the other half.

The other 49 percent is in the hands of the two sisters who created Maje and Sandro, Judith Milgrom and Evelyne Chetrite respectively. It was not immediately clear whether they would also sell part of their stake to KKR.

Annual sales generated by Sandro, Maje and sister brand Claudie Pierlot, grouped under holding company SMCP, are estimated at more than 300 million euros, with earnings before interest, taxes, depreciation and amortization of 60 million, sources have told Reuters.

(Reporting by Christian Plumb; editing by Patrick Graham)