LOS ANGELES (Reuters) - Arista Records' legendary founder, Clive Davis, who was nearly eased out last year, is back in the groove, being wooed by his bosses at Bertelsmann AG as well as other companies to start a new label, sources said Thursday.

The sources said that Bertelsmann Music Group, the $4.6 billion worldwide music and entertainment division of Bertelsmann, was now offering Davis as much as $800 million to launch a label, in which he'd have an equity stake, plus a yearly salary of about $20 million.

``He's in negotiations with BMG, but if the negotiations don't pan out exactly to his liking, he's also looking at (Time Warner Inc.'s) Warner or (Seagram Co. Ltd's) Universal Music,'' a source close to the situation told Reuters.

Davis has run Arista -- home to stars like Santana, Aretha Franklin and Whitney Houston -- successfully for the past 25 years. The label contributes about a third of BMG's market share.

Arista has 45 Grammy nominations this year, with the ceremony shaping up to be Santana's night with the artist leading the field with 10 nominations.

The 42nd annual Grammy Awards, voted on by 10,000 members of the National Academy of Recording Arts & Sciences, will be held next Wednesday at the Staples Center in Los Angeles.

Other Arista acts, such as TLC and Sarah McLachlan, are also strong contenders for Grammys.

Davis, 66, who has three nominations himself for producing Santana and Houston, was philosophical about the label's Grammy prospects in a recent interview. ``I don't count any chickens, I honestly don't ... I really don't go with a score sheet of what I expect,'' he said.

BMG and Davis declined to comment on the negotiations.

``It would be the biggest instant major label start-up and it's very exciting, especially with all the record companies consolidating right now,'' said the source, regarding the proposed start-up.

BMG has changed its tune since a boardroom brawl erupted in November amid plans by BMG chief Strauss Zelnick to install Antonio ``L.A.'' Reid as president of Arista and as Davis's eventual successor.

Davis, whose contract expires in June, saw the succession plan as a maneuver to oust him. It also sparked outrage in many of his well-known artists.

BMG then began earnestly negotiating with Davis to start a new label to avert a crisis. As for Arista, the source said, ''the succession process is still in play. Arista would continue under L.A. Reid,'' the source said.

A formal announcement is expected in late spring.

Santana paid tribute to Davis at the American Music Awards last month when he won the award for favorite pop/rock album.

Santana hailed Davis for his ``convictions, tenacity and vision'' in getting the album made. He then asked Davis to come to the stage, which prompted a standing ovation.

Reuters/Variety