* Billionaire had backed bid to rival Qatari tie-up
* Planet IB consortium says it has firepower for takeover
* CEO could make hostile buy-out approach for EFG
By Ehab Farouk and Patrick Werr
CAIRO, June 5 (Reuters) - Egyptian billionaire Naguib Sawiris will drop out of a buy-out consortium targeting investment bank EFG Hermes after EFG shareholders backed an alternative tie-up with Qatar's QInvest, an EFG source told Reuters on Tuesday.
But the head of the buy-out group vowed to press on with the bid, saying it had the financial firepower it needs and would consider a hostile approach for Egypt's biggest investment bank.
Economic turmoil and a morose financial market since a popular uprising have left EFG lacking the means for its ambition to expand across the Middle East and in March it announced talks over an alliance with Qatar's QInvest.
But last week a group of Egyptian and Gulf Arab investors announced a rival bid for EFG.
The consortium, Planet IB, said on Friday it was prepared to pay a minimum of 13.50 Egyptian pounds per share for the Cairo-based bank, which would value it at $1.1 billion at least.
Then on Saturday EFG shareholders voted to go ahead with the QInvest tie-up, which would give the Qatari firm 60 percent of EFG's main investment banking operation.
Planet named telecoms entrepreneur Sawiris, one of Egypt's richest men, as a financial backer.
But the EFG source, who asked not to be named, said Sawiris had now dropped out of the consortium because a condition for his taking part was that EFG shareholders would vote against the QInvest venture.
The source said EFG received a phone call from Sawiris saying "he would have participated in the Planet offer to buy EFG Hermes on condition that the EFG Hermes extraordinary general assembly vote against the strategic coalition with QInvest, and that did not happen".
Sawiris declined to comment to Reuters.
EFG shares were down 2.9 percent at 10.56 pounds on Tuesday.
EFG said on Monday it was taking legal measures to protect the company and its shareholders from Planet's takeover attempt.
EFG stock plunged after Egypt's popular uprising last year and the bank came under further pressure last week when its two chief executives were referred to trial alongside former president Hosni Mubarak's two sons as part of a probe into illegal share dealings.
The bank said the allegations levelled at its executives were false and it vowed to defend them.
Planet Chief Executive Ahmed El Houssieny said his group would take their bid hostile if necessary, but not before due diligence proceedings that would allow them closer scrutiny of EFG's accounts.
"We are investigating with the regulator the possibility of launching a public tender offer subject to due diligence," the CEO told Reuters.
EFG management has questioned the credibility of the Planet approach and its ability to finance a buy-out. EFG has a market capitalisation of around $870 million, less than half of its value before the uprising.
Houssieny said Planet had secured $650 million of credit financing by signing an arrangement mandate that could be presented to Egypt's financial regulator EFSA.
He said 13.50 pounds per share was the minimum offer that Planet would make but it was "entirely contingent upon EFG Hermes opening its books to due diligence by Planet IB".
"It is impossible to consider undertaking a transaction of this size without the opportunity to do legal, financial and commercial due diligence on the same terms as were afforded our competitor," he said. (Writing by Tom Pfeiffer; Editing by Jon Loades-Carter)