MADRID - Valencia striker David Villa, one of the stars of Spain's victorious Euro 2008 squad, is close to signing for Real Madrid, a Spanish newspaper said Tuesday.

He would become the second big name to join the club under new president Florentino Perez, after Brazil's 2007 world footballer of the year Kaka completed his transfer from Italian giants AC Milan on Monday for a reported 65 million euros.

Perez has established a 200 million euro (S$405.4 million) war chest for players, vowing to create a "spectacular team" capable of overtaking arch-rivals Barcelona next season.

The sports daily Marca said Real are set to pay 37 or 38 million euros for Villa plus bonuses linked to future results.

The top scorer at Euro 2008, Villa, 27, scored 28 goals in the Spanish championship this season.

But Valencia is reportedly ready to sell some of its top stars in a bid to ease its financial difficulties.

Perez returned as president of Real on June 1.

During his first stint, from 2000 to 2006, he oversaw the era of the "Galacticos" when world stars such as Zidane, England's David Beckham and Brazil's Ronaldo were attracted to the club.