* ADM offers A$12.20/shr vs prior bid at A$11.75/shr
* ADM hikes stake to 19.9 pct, making rival bid difficult
* Offer also includes 35 cps dividend announced in Nov
* GrainCorp says to respond in due course
SYDNEY/NEW YORK, Dec 4 (Reuters) - U.S. agribusiness giant Archer Daniels Midland Co moved closer to securing GrainCorp Ltd after raising its takeover bid to $2.9 billion and hiking its stake in Australia's last major independent grains handler.
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, the world's second-largest wheat exporter and an attractive market due to stable policies and good links to Asia.
ADM, which is looking to increase its geographical spread, upped its offer by 3.8 percent from A$11.75 per share to A$12.20 per share in cash -- a more than 40 percent premium to GrainCorp's share price at the time of the initial offer.
Analysts and shareholders had been expecting a higher bid from ADM, or from rivals, with the share price trading above the offer price. The latest bid was pitched at about the top of Graincorp's trading range since the original offer, and is above its A$11.94 closing price on Monday.
"I think that the initial bid being so far above the then prevailing market price did scare off other potential buyers. That's the intention and I suspect increasing it they are further ratcheting up the pressure," Michael McCarthy, chief market strategist at CMC Markets.
"We can't rule (other bidders) out - agriculture assets are very valuable around the globe. But this makes it very difficult for anyone to compete," he added.
GrainCorp rejected ADM's earlier $2.8 billion bid, saying it undervalued its strategic assets after a bumper harvest delivered a record annual net profit.
GrainCorp noted the "revised, non-binding and conditional proposal" and said it would advise the market in due course, while again noting its unique portfolio of strategic assets.
GrainCorp operates seven of the eight bulk grain elevators in eastern Australia, handling as much as 60 percent of the region's wheat, barley, canola, chickpea and sorghum crops.
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.
Including a recently announced dividend of 35 cents per share, which GrainCorp shareholders would be able to keep, ADM said its new offer was worth A$12.55 per share.
ADM said it acquired an additional 5 percent of GrainCorp for the new offer price, raising its stake to 19.9 percent - the limit under Australian takeover laws before it must make a bid for the entire company.
Among a long list of potential rival bidders identified by analysts are Cargill and Louis Dreyfus -- two of the four "ABCD" firms (ADM, Bunge, Cargill and Louis Dreyfus) that have dominated the global agricultural business for decades.
Other possible bidders include Singapore's Wilmar International, China's Bright Food Group and COFCO.
ADM said its offer was subject to due diligence, which it is ready to begin immediately if granted approval by the GrainCorp board.
ADM Chief Executive Patricia Woertz said the bid offered more certainty, greater value and immediate returns than GrainCorp's standalone plan.
ADM shares rose 0.3 percent to $26.79 in New York trade on Monday.