Oct 4 (Reuters) - Europe's biggest gas distributor

Italgas is nearing an agreement on a proposed 5 billion

euro ($5.51 billion) deal to acquire its main domestic rival 2i

Rete Gas, Bloomberg News reported on Friday.

Italgas is expected to seal the deal with 2i Rete Gas in the

coming days, and the transaction's total value includes debt,

the report said citing people familiar with the matter.

($1 = 0.9069 euros)

(Reporting by Devika Nair in Bengaluru; Editing by Abinaya

Vijayaraghavan)