* Latecoere shares surge higher
* Buying stake at price of 3.85 euros/share
* Searchlight seeking board representation at Latecoere (Adds share price reaction, background)
PARIS, April 2 (Reuters) - Investment company Searchlight Capital Partners has agreed to buy a 26 percent stake in French aeronautics company Latecoere for around $106.8 million, as activist funds continue to flex their muscles.
Activist investors have been snapping up stakes in companies they feel are underperforming in a volatile economic environment, pushing for changes in strategy to extract more value for shareholders.
In France, Elliott is piling pressure on drinks group Pernod , CIAM is tussling with reinsurer Scor, and Amber Capital has acquired a stake in Lagardere.
Searchlight Capital said it would buy the stakes in Latecoere held by Apollo Capital Management, Monarch Alternative Capital and CVI Partners, at a price of 3.85 euros per share.
Latecoere shares surged 5.4 percent to 3.30 euros at the market open, giving the company a market capitalisation of around 310 million euros ($347 million).
Latecoere cut its earnings outlook last December after start-up costs related to new contracts hit its margins and cash flow, although the company's latest set of results earlier this month showed signs of a recovery.
Latecoere said it welcomed Searchlight's move and Searchlight's presence on its board of directors.
"The company welcomes this proposed transaction, Searchlight having shown on this occasion its support for the strategy proposed by management and approved by the board of directors," Latecoere said in a statement.
It added that Searchlight will propose three candidates to to join the board of directors.
($1 = 0.8933 euros) (Reporting by Sudip Kar-Gupta; Editing by Rashmi Aich and Kirsten Donovan)