GrainCorp. has agreed to buy smaller rival AWB in a deal worth $855 million Aus. to bulk up against big global competitors like Bunge Ltd., Cargill and Glencore.
The surprise all-shares deal would create a combined Australian group with a market capitalization of more than $2 billion and revenues of $7 billion that will become the leading exporter in the world’s fourth-largest wheat exporting nation.
It also dashed U.S. commodities firm Gavilon Group’s long-running efforts to secure a 50-50 grain trading joint venture with AWB despite both sides announcing a deal in May.
AWB management said the Grain-Corp deal offered more value for shareholders.
Competition is fierce for Australia’s wheat industry, which is counting on a bumper crop this year, while suppliers in Europe and Russia struggle with poor production.
