UPDATE 3-Paper Excellence, Suzano duel for $12 bln Fibria deal -sources

(Adds share performance)

SAO PAULO, March 12 (Reuters) - Wood pulp producer Paper Excellence has made a formal bid to acquire Brazil's Fibria Celulose SA after barging into the company's tie-up talks with another rival, three people with direct knowledge of the matter said on Monday.

According to the sources, who requested anonymity because the matter was still private, Paper Excellence's bid values Fibria at 40 billion reais ($12.3 billion), a more than 10 percent premium over Friday's closing share price.

Netherlands-based Paper Excellence also offered a break-up fee of 4 billion reais if it fails to find financing for the bid, sources said.

Paper Excellence, controlled by the Wijaya family, which also controls Asia Pulp & Paper Company Ltd, decided to bid after reports that Fibria was negotiating a tie-up with Brazilian rival Suzano Papel e Celulose SA, the sources added.

According to one of the sources, Suzano's proposal to Fibria shareholders would be structured differently, as a merger only offering cash to shareholders in the controlling group. Paper Excellence has offered cash to all shareholders, sources said.

Fibria shares rose nearly 4 percent in Monday trading, while Suzano shares fell about 5 percent the biggest gain and loss on the benchmark Bovespa stock index.

Representatives of Fibria and Paper Excellence did not respond to requests for comment. Last week Paulo Rabello de Castro, chief executive officer of Brazilian development bank BNDES, confirmed the talks between Fibria and Suzano.

BNDES and industrial conglomerate Votorantim Participações SA are controlling shareholders in Fibria. BNDES also has a stake in Suzano. The sources added that BNDES' support would be decisive in reaching a deal.

Brazilian newspaper Valor Econômico first reported the Paper Excellence bid on Monday.

Paper Excellence acquired Eldorado Brasil Celulose SA last year for $4.7 billion. Fibria and Eldorado both have operations in the city of Três Lagoas, in the state of Mato Grosso do Sul.

The investment banking unit of Banco BTG Pactual SA is advising Paper Excellence on the Fibria bid, according to sources.

BTG Pactual did not respond to a request for comment. BNDES declined to comment.

($1 = 3.26 reais) (Reporting by Carolina Mandl Additional reporting by Gram Slattery and Tatiana Bautzer Editing by David Gregorio and Tom Brown)