Sydney Airport board to grant due diligence after improved $17.4 bln offer

* Bidder is a consortium of infrastructure investors

* Latest proposal is 3.6% higher than last one

* Non-exclusive due diligence expected to take 4 weeks

SYDNEY, Sept 13 (Reuters) - Sydney Airport Holdings Pty Ltd said on Monday it had granted a consortium of infrastructure investors access to due diligence after the group boosted a takeover proposal by 3.6% to A$23.6 billion ($17.37 billion).

The improved offer of A$8.75 a share compares to prior proposals from the consortium of A$8.45 and A$8.25 respectively, both of which had been rejected by the airport operator's board as inadequate.

Sydney Airport shares last closed at A$8.00 on Friday, before the increased offer price was announced.

The bidding consortium, Sydney Aviation Alliance $(SAA.UK)$, is comprised of Australian investors IFM Investors, QSuper and AustralianSuper and U.S.-based Global Infrastructure Partners.

SAA has been granted non-exclusive due diligence that is expected to take four weeks after signing a non-disclosure agreement, Sydney Airport said.

If SAA makes an acceptable binding proposal, the current intention is for the board to recommend it in the absence of a superior offer, the airport operator added.

A SAA spokesman said the consortium welcomed the announcement and looked forward to working with Sydney Airport's board to finalise the transaction. ($1 = 1.3587 Australian dollars)