Viterra to buy Australia's ABB for $1.2 billion

SASKATOON, Saskatchewan (Reuters) - Viterra Inc (VT.TO), Canada's top grain handler, has agreed to buy Australia's ABB Grain Ltd (ABB.AX) in a $1.2 billion share and cash deal, giving Viterra better access to Asian markets.

Viterra's (VT.TO) proposed acquisition would add "meaningfully" to earnings in the first year, the company said on Tuesday, and could bring synergies of about A$30 million ($23.3 million) a year. Job cuts are not expected.

The combined company -- the name of which has not been determined -- would have the geographic advantages of crop supply from different hemispheres, hedging it against weather-related risk.

Buying ABB would likely help the Canadian company lower its transport costs by enabling it to ship grain through Australia to high-growth markets in Asia, instead of shipping directly from Canada.

Viterra Chief Executive Mayo Schmidt said the deal would position the company well to supply Asia with imports of wheat, barley and canola, which he estimated would grow 39 percent over 10 years.

"There's quite a bit to feel good about and that's the scale and diversification and the fact it's being financed fairly prudently," said Anil Passi, senior vice-president of DBRS, a Canadian credit rating agency.

The deal values ABB shares at A$9.11-A$9.41, a premium of up to 9.4 percent from ABB's last traded price. The offer includes a special cash dividend of 41 Australian cents to be paid by ABB. Its shareholders also have other options

Shares of Viterra on Tuesday afternoon rose about 2.9 percent on the Toronto Stock Exchange, while ABB (AY9.F) shares gained 7.8 percent to 4.96 euros in Frankfurt before Australian trade opened on Wednesday.

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