UPDATE 3-Vale readies share offer as takeover talk swirls

(Adds comment on Freeport, updates share prices)

By Todd Benson

SAO PAULO, June 10 (Reuters) - Brazilian mining giant Vale said on Tuesday it would sell up to $15 billion in shares to help finance growth in its existing businesses and potential acquisitions, but denied it was in takeover talks.

The announcement was made on the same day that O Estado de S.Paulo newspaper reported that Vale (VALE5.SA)RIO.N was working on a bid of more than $30 billion for one of the world's largest mining companies.

The report, citing unnamed sources close to the company, said Vale would issue shares to finance the acquisition. The newspaper named three potential takeover targets: Anglo American (AAL.L), U.S.-based Freeport-McMoRan Copper and Gold (FCX.N), and U.S. aluminum giant Alcoa Inc (AA.N).

A spokeswoman for Vale, short for Companhia Vale do Rio Doce, said the company would not comment on the report. Alcoa and Freeport-McMoRan also declined to comment.

In a statement to Brazil's securities regulator, Vale said its board approved the share offering on May 26 and that the terms of the sale had not yet been determined.

It said it would use the proceeds from the offering to finance growth in its existing businesses, often called organic growth, and potential acquisitions, as stipulated in its current $59 billion investment plan.

Vale stressed, however, that it was not currently negotiating any "strategic acquisitions."

"Vale says the offering is part of its investment plan, but I'm not so sure that it's so necessary because their debt level is relatively low," said Rodrigo Ferraz, a steel and mining analyst at Brascan brokerage in Rio de Janeiro.

"Even though they claim they're not negotiating with anyone right now, nothing is stopping them from going after an acquisition," he added.

BUILDING UP A WAR CHEST?

Vale, already the world's largest producer and exporter of iron ore, has been aggressively branching out into other metals in recent years to diversify its revenue base.

Since Roger Agnelli took over as chief executive in 2001, Vale has completed 14 acquisitions, including the $18 billion takeover of Canadian nickel producer Inco in 2006.

Earlier this year, it tried and failed to acquire Swiss rival Xstrata (XTA.L) in a deal that some analysts valued as high as $90 billion, which would have made it one of the biggest takeovers in corporate history.

If Vale sets its sights on any of the companies mentioned in the Estado report, it would have to supplement the money it raises in the share sale with cash from other sources. For the Xstrata bid, Vale secured a $50 billion credit line from a pool of banks including Santander, HSBC and Citigroup.