GrainCorp intends to make an off-market takeover offer for all the used shares in Ridley.
Under the proposal announced today, GrainCorp is offering Ridley shareholders one GrainCorp ordinary share for every nine Ridley ordinary shares.
The offer values Ridley at $1.39 per share (the implied offer price) based on yesterday's closing price of GrainCorp shares of $12.48.
The implied offer price implies a Ridley equity value of approximately $415 million and an enterprise value of approximately $592m.
The implied offer price represents a premium of 22pc to Ridley's one month volume weighted average price up to May 15, and a premium of 25pc to Ridley's three-month volume-weighted average price up to May 15.
GrainCorp managing director, Mark Irwin, said the proposed acquisition has a strong strategic rationale for both companies.
"The acquisition of Ridley will further consolidate our strategy of being Australasia's leading handler and supplier of agriproducts and bulk products," Mr Irwin said.
"There is a strong fit between GrainCorp and Ridley given the complementary nature and linkages between the businesses.
"GrainCorp is already involved in the key inputs that represent the majority of stock feed production costs, being grain and other co-products.
"Ridley and our subsidiary Allied Mills would process up to two million tonnes of grain per annum, providing base load consumption within our average grain receivals of 10mt per annum."
GrainCorp currently has a relevant interest in approximately 19pc of Ridley's issued shares through pre-bid acceptance arrangements.