(Corrects name of Brazil unit of Elavon throughout to Elavon do Brasil, not Elavon no Brasil.)
By Cesar Bianconi and Aluísio Alves
SAO PAULO, Feb 10 (Reuters) - U.S. Bancorp will likely join partner Citigroup Inc and sell its stake in Elavon do Brasil, a Brazilian credit card processing joint venture that Citigroup has been trying to exit since late last year, two sources involved in sale talks told Reuters.
Elo Participacoes SA, a holding company controlled by Banco Bradesco SA and Banco do Brasil, has been in negotiations to buy Citigroup's 49 percent stake in Elavon do Brasil. With the 51 percent stake of U.S. Bancorp now on the table too, Elo is in talks to buy the whole company, the first source said.
The sources spoke to Reuters on Friday and Monday.
During talks, Bradesco refused to accept demands that Brazilian credit card transactions continue to be carried out on Elavon data systems in the United States, a condition that would saddle Elavon's Brazilian unit with fees in dollars, the second source said.
Neither of the sources would give a value for a possible Elavon do Brasil purchase. They requested anonymity because the talks between Elavon do Brasil and Elo are private.
A deal, though, could be slowed or complicated by Brazil's antitrust regulator, Cade, the two sources said.
Cade declined to comment on a deal until a formal request for approval is made. It is common, though, for companies negotiating mergers or acquisitions to consult the agency before making a formal request for approval of a transaction.
Banco do Brasil and Bradesco, the owners of Elo, are also the principal partners in Cielo, the biggest electronic payments company in Brazil.
Elavon do Brasil, even though it has only 1 percent to 2 percent of the market offers a simpler and cheaper product and could complement the services offered by Cielo.
U.S. Bancorp has owned U.S.-based Elavon Inc since 2001. It has been in the Brazilian joint venture with Citigroup since 2012. Citigroup sought to sell its stake after Brazil's central bank demanded that Elavon do Brasil partners put more capital into the company even as the economy was shrinking.
Elavon do Brasil had originally hoped to win 15 percent of the Brazilian market, but it has been pushed aside by rivals Cielo, the Rede unit of Itau Unibanco SA and GetNet, owned by Santander Brasil SA, which control more than 90 percent of the Brazilian market.
Elavon do Brasil, Banco do Brasil, Bradesco, Citigroup, Elavon and U.S. Bancorp all declined to comment. (Writing by Jeb Blount; Editing by Steve Orlofsky)