Archer Daniels Midland on Monday raised its bid for Australia's GrainCorp to US$2.9 billion in cash from $2.8 billion, as the U.S. agribusiness group seeks to expand its geographic reach.

ADM is now offering A$12.20 (US$12.73) per share in cash, up from its prior bid of A$11.75. Including a recently announced dividend of 35 cents per share, which GrainCorp shareholders would be able to keep, ADM said its new offer is for A$12.55 per share.

ADM said the new proposal reflected the value of GrainCorp's business, taking into account its 2012 results, new initiatives and dividends announced on Nov. 15.

ADM said it acquired an additional five per cent of GrainCorp for the new offer price, raising its stake to 19.9 per cent.

The offer comes at a time of dramatic consolidation in the global grains sector amid intense competition to feed fast-developing countries seeking food security.

GrainCorp is the last available independent asset of scale in Australia, which is an attractive market due to stable policies and good links to Asia.

GrainCorp rejected ADM's earlier bid, saying it undervalued GrainCorp after a bumper harvest delivered a record annual net profit. At the time, analysts and shareholders said they expected a higher offer, or offers from rivals.

ADM said its offer was subject to due diligence, which it is ready to begin immediately.

ADM CEO Patricia Woertz said the bid offered more certainty, greater value and immediate returns than GrainCorp's standalone plan.

A GrainCorp spokesman was not immediately available to comment. -- Reuters