SYDNEY/REUTERS

Australia’s GrainCorp has agreed to take over smaller rival AWB in an A$855 million (US$769.6 million) all-share deal that will create the country’s top grain exporter and the world’s fourth-largest commercial malt producer.

GrainCorp said July 30 its offer would create a combined group with a market capitalization of more than A$2 billion that will become a key player in the world’s fourth-largest wheat-exporting nation.

Under the recommended transaction, still subject to regulatory approval, AWB shareholders will get one GrainCorp share for every 5.75 AWB shares, the firms said.

The deal values AWB at A$855 million based on the July 29 closing share price, according to Reuters calculations. GrainCorp shareholders would hold 58 per cent and AWB 42 per cent of the merged company.

Australia’s 2010-11 wheat crop is seen around 22 million tonnes, just above the previous year’s 21.7 million tonnes and could account for around eight per cent of global trade.

“The merged company will have the scale to compete more effectively against the large, global grain companies now competing domestically, and exporting grain from Australia, and places us in a strong position to take advantage of the growing food demand from Asia, the Middle East and North Africa,” GrainCorp chairman Don Taylor said.

Both companies said the merger would deliver cost savings of more than $40 million a year.