CORRECTED - CORRECTED-Rio Tinto sees break-up as a reserve option-report

(Corrects value of offer in 2nd paragraph to 3.4 shares for 1, instead of 3 for 1)

SYDNEY, May 2 (Reuters) - Rio Tinto Ltd/Plc (RIO.AX)(RIO.L) Chairman Paul Skinner said a break-up of his company is an option in order to extract the best possible return for shareholders, The Sydney Morning Herald said on Friday.

Rio, fighting one of the biggest corporate takeover battles ever with unwanted suitor BHP Billiton (BHP.AX)(BLT.L), has said the 3.4 for one share offer, worth $147 billion when it was pitched in February, falls short of what the company's worth and at that price it was better off on its own.

Skinner said a break up would not be Rio's preferred course of action, but it would be considered in order to get the best outcome, the paper said, citing a "wide-ranging" interview with Skinner this week.

Rio would not comment on the report, company spokesman Ian Head said.

Rio and BHP executives have staged a war of words as BHP lobbies its case for a tie-up with Rio shareholders and anti-trust agencies worldwide, a process it says will take until at least December.

Skinner was reluctant to "officially" say that the BHP offer would be knocked back if it passes regulatory hurdles, according to the report.

But he "agreed that the sum-for-the-parts issue is one that would be considered if BHP's offer fell short of what a potential break-up could achieve," the report said. (Reporting by James Regan)