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.

After being privatised in 1992, Graincrop expanded through strategic acquisitions.

In 2002 GrainCorp entered into a joint venture with US agribusiness giant Cargill to purchase Allied Mills, and acquired United Malt Holdings, the world's fourth-largest commercial malt manufacturer for $757 million in 2009, and German Schill Malz in 2011 for $75.8 million.

GrainCorp has over 280 country elevators in Australia, grain storage capacity of up to 20 million tonnes spread across more than 2700km from Queensland to Victoria, and operates seven bulk grain export elevators, serviced by 20 contracted trains with the capability of hauling up to 4 million tonnes of grain annually.

GrainCorp Marketing buys and sells more than 4.5 million tonnes of wheat, barley, sorghum and canola per year, while GrainCorp Malt is one of the world's largest commercial malt producers, producing over 1 million tonnes of specialty malts annually for the world's leading brewers and distillers.

Founded in 1902 by George Archer and John Daniels, ADM is one of the world's largest agricultural processors with more than 270 processing plants, 420 crop procurement facilities and a large crop transportation network.

With annual sales of over $80 billion and market capitalisation of more than $19 billion, Archer Daniels is 10 times the size of GrainCorp by value.

Analysts say that there could be rival bidders due to the strategic nature of Graincorp's assets and the low-ball offer made by ADM. Rival bids could come from Cargill, Bright Foods, Bunge, Wilmar and Louis Dreyfus, they say.

The agriculture sector has seen two large acquisitions this year. In March, commodities giant Glencore International struck a $6.2 billion cash deal to acquire Canada's largest grain handling company Viterra Inc, (See: Glencore to acquire Canadian grain handler Viterra for $6.2 bn) and In May, Japan's Marubeni bought US grain merchant Gavilon, for $3.6 billion. (See: Marubeni to acquire Gavilon Group for $3.6 bn)