LONDON/FRANKFURT, April 4 (Reuters) - ProSiebenSat.1 has

lined up defence advisers, including Morgan Stanley ( MS ),

after receiving a takeover bid from its largest investor

MFE-MediaForEurope, the TV group controlled by Italy's

Berlusconi family, two people with knowledge of the matter said.

Last week, MFE launched a bid for the shares of ProSieben it

does not already own, offering the minimum price allowed by the

German law, equal to the volume-weighted average price of

ProSieben shares over the past three months.

Due to the structure of MFE's bid, ProSiebenSat.1's

defence strategy may be limited, but will likely include

improving performance within the group's different businesses,

according to one of the people. The people spoke on condition of

anonymity because they were not authorised to speak publicly.

ProSiebenSat.1, Morgan Stanley ( MS ) and MFE declined to comment.

MFE, which has commercial TV operations in Italy and Spain,

made the bid as part of a larger plan to create a pan-European

advertising-funded broadcaster - a strategy so far resisted by

ProSieben, which wants to stay independent.

MFE also agreed to buy shares from an existing ProSieben

investor that would take its 29.9% stake to a 30% threshold -

the level which triggers a takeover bid - regardless of the

outcome of the buyout offer.

This means that, once the offer period ends, MFE can buy

additional ProSieben shares on the market without having to

repeat a formal offer to all investors.

German market regulator BaFin confirmed earlier this week

the price of the cash and share bid is 5.74 euro a share, giving

the offer a value at that time of about 940 million euros.

($1.04 billion).

($1 = 0.9062 euros)