By Kane Wu and Yantoultra Ngui

HONG KONG/SINGAPORE (Reuters) -Two Southeast Asian paper makers, Royal Golden Eagle (RGE) and Asia Pulp & Paper (APP), have emerged as final bidders for Swedish tissue maker Essity's 52% stake in Hong Kong-listed Vinda International, three people with direct knowledge of the matter said.

A deal for tissue and diaper maker Vinda could be reached before Christmas, if either offer proves satisfactory, said two of the people, who declined to be identified as the information is confidential.

RGE is making a full cash offer while APP's bid comes with the need for financing from lenders, according to two of the people.

An offer would likely represent a small premium to Vinda's market price, one of the sources said.

The company's shares ended 2.5% higher at HK$20.75 on Tuesday, valuing Essity's stake at HK$12.9 billion ($1.65 billion), LSEG data showed. Vinda's shares have dropped 9.8% so far this year.

RGE declined to comment. Essity, Vinda and APP did not respond to requests seeking comment.

Essity kicked off a bidding process for its stake in May which attracted private equity firms including Bain Capital, CVC Capital Partners and DCP Capital, as well as Vinda's Brazilian supplier Suzano, Reuters has reported.

An offer could also lead to a buyout of the company, Vinda has said.

RGE, a Singapore-headquartered group owned by Indonesian billionaire Sukanto Tanoto, and Indonesian pulp and paper company APP emerged as serious bidders late in the process and remained in the discussions as other bidders were sidelined, the people said.

Negotiations are fluid and may not result in a deal, the sources cautioned.

Essity's sale of its Vinda stake comes as multinational companies are reviewing their presence in China or holdings in Chinese businesses, amid heightened geopolitical tensions and China's economic slowdown.

The Swedish maker of hygiene products has said it wants to reduce its consumer tissue division's share of group sales by selling off its Vinda stake.

Founded in 1985, Vinda's core business segments include tissues, sanitary napkins and adult and baby diapers.

It has eight brands and 13 production bases, 10 of which are in mainland China, according to the company's website.

Hong Kong Stock Exchange filings show RGE's Managing Director Belinda Tanoto, the daughter of Tanoto, built a 7% stake in Hong Kong-listed Vinda via Beaumont Capital Fund in October.

Founded by Tanoto in 1973, RGE has expanded into a group of resource-based manufacturing companies in businesses ranging from pulp and paper to energy with more than $30 billion in assets and 60,000 employees, its website showed.