Australia's Graincorp bids for Ridley

By Fayen Wong

PERTH, Australia (Reuters) - Australian grain handler Graincorp Ltd (GNC.AX: Quote, Profile, Research) offered to buy livestock feed maker Ridley Corp (RIC.AX: Quote, Profile, Research) for A$415 million ($392 million), as it positions itself for an industry shake-up, sending Ridley's shares up nearly 12 percent.

Graincorp's all-share offer comes as Australia's grain industry is rationalizing ahead of the break up of the wheat export monopoly previously held by the disgraced AWB Ltd

(AWB.AX: Quote, Profile, Research).

Graincorp is offering 1 of its shares for every 9 Ridley shares, representing an implied offer price of A$1.39 per Ridley share, based on Graincorp's May 15 closing price of

A$12.48.

"There are potentially a lot of synergies across both companies and the combined group will make a very strong business," said Jason Teh, a fund manager at Investors Mutual Ltd, which holds Graincorp shares.

Ridley told its shareholders to take no action until the offer is reviewed in detail by the board, adding it would respond to the offer next week.

Shares in Ridley, Australia's biggest feed maker according to its website, rose as much as 11.5 percent, but later pared gains to settle 7.7 percent higher at A$1.40, suggesting investors expected a higher bid.