With food security a key global issue and droughts across the U.S. and Ukraine crimping wheat supplies investors are betting GrainCorp will attract a higher price and potentially also rival suitors, possibly including Bunge Ltd., Cargill Inc., or Louis Dreyfus Holding BV. GrainCorp failed to endorse the Archer bid in its short statement, fueling excitement about a potential bidding war and prompting its shares to surge ahead of the Decatur, Ill. company's A$11.75-per-share proposal to close up 39% at A$12.30.

"The GrainCorp board is reviewing the proposal and has not yet formed a view on its merits and will keep the market informed of any material developments," it said. "GrainCorp has a unique portfolio of integrated, strategic assets and is confident in its outlook and strategy to continue to deliver shareholder value. GrainCorp will provide a detailed update on the performance and outlook of the business at its upcoming results announcement."

The Archer Daniels bid is conditional on due diligence, exclusivity and approval by its own board.

The U.S. company first disclosed its takeover interest on Friday, revealing it had paid A$11.75 per share to lift its GrainCorp holding to 14.9%.

At the time, Archer Daniels chairman and CEO Patricia Woertz said her company would help Australian farmers capitalize on growing global demand for crops and food, particularly in Asia and the Middle East.

GrainCorp, originally part of the New South Wales government's agricultural department, is best known for its grains storage and marketing services. In August it struck two deals to become Australia's No. 2 supplier of edible fats after agreeing to pay a total of A$472 million for Gardner Smith (Holdings) Pty. Ltd. and Integro Foods, the oilseed unit of Goodman Fielder Ltd.

In May GrainCorp posted an above-forecast 36% rise in first-half Ebitda to A$235 million and lifted its full-year Ebitda guidance to between A$385 million and A$415 million.

Australia is the world's No. 2 wheat exporter behind the U.S. and has been the scene of several takeovers in the grains sector in recent years.

In 2010, Canadian fertilizers maker Agrium Inc. bought AWB Ltd., Australia's largest bulk wheat exporter, for A$1.2 billion after trumping GrainCorp.

In 2009, Canadian agricultural commodities company Viterra Inc. became the dominant Southern Australian grains storage provider after its purchase of ABB Grain Ltd. Viterra earlier this year agreed to a C$6 billion ($6.1 billion) takeover by Glencore International plc, which is awaiting Chinese regulatory approval to close the deal.

The Viterra takeover deal followed Marubeni Corp.'s May agreement to pay $5.6 billion for Gavilon LLC, another agricultural commodities company.

Archer Daniels operates in 75 countries, with business areas including oilseeds and corn processing and agricultural services. It had fiscal 2012 sales of $89 billion. As of Friday's close, it had a market value of $18.8 billion, after its stock slid 1.9%.