CIA Vale do Rio Doce, the world's biggest iron-ore producer, has raised 18.4 billion reais (US$11.6 billion) in a share sale, which was less than expected as commodities and oil stocks declined.

Vale sold 256.9 million common shares for 46.28 reais each and 164.4 million preferred shares, excluding the over-allotment option, for 39.90 reais each, according to a filing yesterday with the Brazilian securities regulator. Vale priced the shares for about 6 percent below yesterday's closing price.

A drop in oil and commodities shares this week may have eroded demand, said Scott Black, president of Delphi Management Inc.

"We have a casino mentality in the United States," Black said. "Energy and materials stocks went down, and if they hadn't gone down, it would have been all right."

Chief Executive Officer Roger Agnelli said last month that Vale was raising the cash to fund acquisitions and expansion. An acquisition would be in addition to the US$59 billion the company was already spending over five years to boost output of iron ore, nickel and other commodities to meet rising global demand.

The share offering, while still the biggest ever by a Brazilian company, fell short of some expectations.

Agnelli said on July 11 the offering would bring in as much as US$15 billion.

Shares fall

Vale's preferred stock fell 2 percent to close at 42.60 reais in Sao Paulo trading yesterday. Common shares declined 1.4 percent to 49.20 reais. The voting shares have declined 16 percent this year, while non-voting stock is down 17 percent.

Goldman Sachs Group Inc yesterday raised its recommendation on Vale to "buy" from "neutral." Goldman increased its six-month price estimate for Vale American depositary receipts linked to common shares to US$42 and preferred ADRs to US$36.

"We see scope for Vale to outperform its peers in the short term due to its inexpensive relative valuation, higher exposure to bulk commodities and recent under performance," said Marcelo Aguiar, a Goldman analyst based in Sao Paulo.

The value of the share offering excludes a possible supplemental offering, or over-allotment of shares. Including the so-called green-shoe option of preferred shares, Vale is raising 19.4 billion reais.

The share sale has fueled speculation Vale is preparing to launch another acquisition bid. Vale, which bought Canadian nickel producer Inco Ltd last year for US$17.3 billion, walked away from a US$90-billion takeover attempt for Switzerland's Xstrata Plc in March.

The acquisition would have made Vale the world's biggest mining company.