* Market reaction prompted rethink -source
* Company has no capital increase plans at present -source (Adds source-based detail on background, options)
By Klaus Lauer and Ludwig Burger
FRANKFURT, Feb 12 (Reuters) - German publisher Axel Springer SE has scrapped plans to change its corporate status to become a limited partnership with a two-tier share structure that would allow it to take on new investors with majority owner Friede Springer and her family retaining full control.
A switch to KGaA status could have raised more capital to spur growth while protecting the position of Friede Springer and her family, but a source close to the company said the new setup would have been too complex and would not have been welcomed by capital markets.
The company said in a statement on Friday its existing legal form of SE, or Societas Europaea, is the better alternative for the long-term development of the company.
"Axel Springer SE remains committed to the goal of becoming the leading digital publisher and will, if necessary, use other suitable options to raise capital," it said.
The source, who asked not to be named, said that these options include taking out new debt and that a capital increase is not on the cards for now.
Growth at Springer's digital business, which includes real estate portals SeLoger and Immonet as well as online job exchange StepStone, has offset declines at its print business, which includes Europe's best-selling tabloid newspaper Bild.
The group declined to comment further.
German blue-chip companies including Henkel, Merck and Fresenius are incorporated as KGaA, granting the founding families or the trusts behind the companies rights such as executive board appointments, in some cases even when holding a capital stake of less than 50 percent.
Reporting by Ludwig Burger; Editing by Alexander Ratz and David Goodman