(Adds dropped word "dispensers" in first paragraph)

By Greg Roumeliotis

May 2 (Reuters) - General Electric Co GE.N is in advanced talks to sell its energy unit that makes fuel dispensers to First Reserve Corp, according to people familiar with the matter, in the latest example of a conglomerate selling an unloved business to a buyout firm.

A deal will likely value GE's unit, called Wayne, at between $500 million and $600 million, the people said this week, asking not to be identified because the talks are confidential. An agreement has not yet been signed and negotiations could still fall through, the people added.

GE and First Reserve declined to comment.

The Wayne unit, based in Austin, Texas, manufactures fuel dispensers for petroleum retailers and commercial fleets as well as compressed natural gas equipment.

Wayne was part of Dresser Inc, the energy infrastructure company that GE bought in 2010 for $3 billion. That deal marked its largest acquisition since the financial crisis and heralded a series of takeovers by GE in the energy space in following years.

GE is investing more in its energy businesses as it seeks to become a dominant supplier of equipment and services to oil, natural gas and alternative power companies. However, the fuel dispenser business is at the low-end of GE's energy offerings and is not a core interest.

GE is currently trying to convince the French government to back its $16.9 billion offer for engineering group Alstom SA's

ALSO.PA power and energy arm, which would boost its position in producing steam turbines for power stations and technology for electricity grids. ID:nL6N0NM5QO

Reuters first reported in February that GE had hired Credit Suisse Group AG CSGN.VX to sell Wayne. ID:nL1N0LW14J

Private equity has shown a strong appetite for non-core units being carved out of companies, seeking to avoid frothy auctions for publicly listed companies as markets rallied.

Earlier this week, for example, Illinois Tool Works Inc

ITW.N completed the sale of its industrial packaging unit to private equity firm Carlyle Group LP CG.O for $3.2 billion.

(Reporting by Greg Roumeliotis in New York; editing by Andrew Hay)

((Greg.Roumeliotis@thomsonreuters.com)(+1 646 223 6022)(Reuters Messaging: greg.roumeliotis.thomsonreuters.com@reuters.net))

Keywords: WAYNE FIRST RESERVE/