TOKYO/HONG KONG, Jan 21 (Reuters) - Japan's Mitsubishi Chemical Group ( MTLHF )

has picked U.S. investment fund Bain Capital as the preferred bidder

for its pharmaceutical subsidiary, Tanabe Mitsubishi Pharma, in a deal that

could value it at over $3 billion, two people with knowledge of the situation

said.

The two sides are in final negotiations, said one of the people, declining

to be named as the information is confidential.

Nikkei reported on Monday the company is likely to sell its Tanabe

Mitsubishi Pharma unit to Bain Capital for more than 500 billion yen ($3.2

billion).

Mitsubishi Chemical ( MTLHF ) said in a statement on Tuesday the Nikkei report was not

announced by the company.

"We are continuously reviewing the ideal business portfolio of the entire

group for all of our businesses, including the Pharma business, and are

promoting portfolio reform with all options, including divestiture, in mind,"

the company said.

Bain declined to comment.

Reuters reported in December that global private equity firms Blackstone

and Bain Capital were among final bidders for Mitsubishi Tanabe Pharma,

in a deal that could value it at between $3 billion and $3.5 billion.

($1 = 156.3500 yen)