PARIS, France - French luxury and sports brands group PPR (PRTP.PA) is in talks to buy control of Richard Mille, one of the most expensive watch brands on the market, an industry source with first-hand knowledge of the matter told Reuters.

The deal could value Richard Mille at 340-400 million Swiss francs, or 2.5-3 times its expected 2013 revenues of 135 million Swiss francs ($146.60 million), said the source, who requested anonymity.

The acquisition of the Swiss-made watch brand, whose barrel-shaped timepieces start at 60,000 euros, would enable PPR to complete its price-range pyramid with JeanRichard at the bottom, Girard-Perregaux in the middle and Richard Mille at the top.

PPR would at first acquire 51 percent of Richard Mille with the possibility of raising its stake further, while Richard Mille would be locked in the business as chief executive and shareholder for a number of years, the source added.

The transaction is unlikely to close before early 2014 at the request of Mille who needs to settle private affairs before going ahead with a sale, the source said.

"The talks are ongoing...The ball is in Mille's camp," the source said on condition of anonymity.

PPR and Richard Mille are not yet officially in exclusive talks but could be in the next few weeks, and PPR has already had full access to Richard Mille's books, the source added.

Richard Mille and PPR, which is expected to change its name to Kering at its annual general meeting on Tuesday, declined to comment.

Richard Mille founded the watch brand in 2001 with the help of privately held Swiss brand Audemars Piguet which supplies it with movements and owns a 10 percent stake.

Audemars Piguet is expected to remain a shareholder and continue working with Richard Mille even if PPR buys control, another source close to Audemars Piguet told Reuters.

"For the moment, there is no deal on the table but the day there is one, I think the two brands will want to continue to work together and Audemars Piguet will want to stay on board," the source said, declining to be named.

HIGH MARGINS

Richard Mille has been successful at elbowing its way into the market with titanium and carbon composite hand-finished watches retailing for as much as 1.6 million euros.

The brand's sales reached 112 million Swiss francs in 2012 and has a ratio of earnings before interest, tax, depreciation and amortisation (Ebitda) to sales of more than 40 percent, one of the highest of the industry, the source said.

Its sales growth rate in recent years has remained above 10 percent, it added.

"Three times sales seems realistic," said Rene Weber, analyst at Vontobel, pointing out that LVMH (LVMH.PA), the world's biggest luxury brand, paid more than three times annual sales for Roman jeweller Bulgari in 2011.

The source said PPR was one of several potential buyers as investors from Asia and Russia had expressed interest but Richard Mille preferred to team up with PPR "to ensure its future development".

A third source close to the matter said LVMH (LVMH.PA), the world's biggest luxury group which owns watch brands Tag Heuer and Zenith, was not interested in buying control of Richard Mille. LVMH also declined to comment.

Richard Mille has not been hit by the general slowdown in high-end watch sales which has affected big groups such as Swatch (UHR.VX) and Richemont (CFR.VX), the source said.

However, critics of the deal pointed out that Richard Mille was a "marketing brand" which did not have strong movement manufacturing capabilities which was a major industry issue as supplies were getting tighter.

PPR, which owns jeweller Boucheron and fashion brands Gucci and Yves Saint Laurent, has made expansion in watches and jewellery one of its top priorities and said acquisition targets would be mid-sized businesses with solid growth potential.

Last year, PPR acquired Chinese jeweller Qeelin and it announced in April a deal to buy Milanese jeweller Pomellato.

(Additional reporting by Silke Koltrowitz; Editing by Mark John and Pravin Char)