Archer Daniels launches $2.77-bn bid for rival Graincorp

US agriculture giant Archer Daniels Midland (ADM) has launched a A$2.68 billion ($2.77 billion) cash bid for Australian rival Graincorp, as part of its plan to expand outside the US.

Illinois-based ADM, which already held a 4.9 per cent stake in Graincorp, had acquired an additional 10 per cent for A$11.75 per share on 18 October, representing a 33- per cent premium to the previous close of $8.85, valuing the Sydney-based company at $2.77 billion.

Graincorp, which halted trading of its shares on 19 October, today said that ADM approached the company over the weekend with an indicative, non-binding proposal to buy all of Graincorp's shares at $11.75.

The offer is subject to several conditions, including exclusivity, due diligence, and a recommendation from the Graincorp board in favour of its bid.

''Our investment in GrainCorp is part of our ongoing portfolio management and is consistent with our strategy of growing our Agricultural Services and Oilseeds businesses by investing in key supply regions outside the United States,'' said ADM chairman and CEO, Patricia Woertz.

Founded in 1916, Graincorp, originally called Government Grain Elevator, a part of the New South Wales government's department af Agriculture, was formed to transport grain from the grain-producing regions of New South through railways.