By Greg Roumeliotis

NEW YORK (Reuters) - WorldPay's private equity owners, Bain Capital LLC and Advent International Corp, have canceled the auction of the payment processing firm's U.S. unit, WorldPay told Reuters on Friday.

No potential buyer was willing to meet Bain's and Advent's price expectations of $800 million to $1 billion, sources familiar with the matter said.

The buyout firms bought 80 percent of WorldPay from Royal Bank of Scotland Group Plc in 2010 for about 2 billion pounds ($3 billion) and were looking to sell WorldPay's U.S. assets to pay themselves a dividend and pay off debt.

Thomas H. Lee Partners LP, CVC Capital Partners Ltd and Thoma Bravo LLC were among the private equity firms in discussions with WorldPay about a deal, the sources said.

Thomas H. Lee explored a partnership with iPayment, a New-York-based company that provides credit and debit card payment processing services to small businesses, in order to acquire WorldPay U.S., said the sources, speaking on condition of anonymity because details of the auction are confidential.

WorldPay U.S. has earning before interest, taxes, depreciation and amortization (EBITDA) of between $90 and $130 million, depending on how its business is accounted for, making its valuation contentious, the sources said.

"Following a strategic review of WorldPay U.S., we have concluded that the growth potential and value of the business will be maximized by remaining part of WorldPay Group," WorldPay spokesman Simon Kutner told Reuters in an email on Friday. He declined to comment on details of the auction.

Bain, Advent, Thomas H. Lee Partners, Thoma Bravo and CVC declined to comment. An iPayment official did not respond to a request for comment.

London-based WorldPay is the second-largest provider of ATM services in the United States. It operates in 40 countries and processes millions of transactions every day, from debit and gift cards to loyalty cards, checks and electronic transfers.

Once a lucrative sector, payment processing has come under pressure from increased competition and technological change that has seen many companies struggle to retain their customers and maintain their pricing models.

First Data Corp, the world's largest payment processing company, controlled by KKR & Co LP , explored selling its financial services business to pay down part of its debt, only to abandon the effort, sources told Reuters last month.

This followed cancellations last year of auctions including payment processing company TransFirst, owned by private equity firm Welsh, Carson, Anderson & Stowe, and First American Payment Systems, controlled by private equity firm Lindsay Goldberg LLC. [ID:nL5E8MFKYY]

The cancellation of the sale of WorldPay U.S. could turn out to be in the parent company's long-term best interests. Moody's Investors Service warned in March that the sale would concentrate the company's activities on the weak economic environment in Britain and slow down future deleveraging.

"The strong profitable growth in WorldPay U.S. has been driven by operational improvements, including investment in a differentiated service targeting small businesses," Kutner said.

(Reporting by Greg Roumeliotis in New York; Additional reporting by Jessica Toonkel in New York; Editing by John Wallace)

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