Agrium highlighted plans for Asian growth as the acquisitive fertilizer group trumpeted approval for its Aus$1.2bn ($1.1bn) bid for AWB, the Australian grain handler, putting deal benefits worth Aus$40m a year on the agenda.

AWB said that its board had unanimously switched approval to the cash bid from Canada-based Agrium, ditching an all-share tie-up agreed with Australia-based GrainCorp last month.

Agrium said that its AWB deal heralded not just investment in AWB, Australia's former wheat export monopoly, but regional expansion.

"The transaction provides a larger stronger platform to support Agrium's future growth, particularly into South East Asia," said the group, which has already completed more than 10 acquisitions in the last six years, expanding both its North American farm retail chain a well as its legacy nutrient operations.

Grain handling 'commitment' 

At AWB, Agrium said it saw deal benefits pegged at Aus$40m a year being achieved primarily through raising margins at the Landmark farm services network.

The profitability lift would be achieved "largely through enhanced purchasing efficiencies, expansion in product offerings and other improvements, as well as some reduction in expenses", Mike Wilson, the Agrium chief executive, said.

However, the deal is also to get Agrium into grain handling. The company said it would "retain AWB's reputable brands and identity", which has been built in the main around grain marketing.

Peter Polson, the AWB chairman, flagged Agrium's "commitment to the grain handling business".

GrainCorp exit

In a separate statement, GrainCorp, whose proposal offered a smaller premium, said that its merger with AWB "will not now proceed".

AWB shares closed at Aus$1.455 in Sydney on Tuesday, just below the value of Agrium's Aus$1.50-a-share offer, and down 0.7% on the day, with many investors holding out little hope of a further offer.

"We cannot rule out the prospect of another higher competing bid being made for AWB," analysts at broker Wilson HTM said.

"However, Agrium's offer appears fully priced."

GrainCorp shares ended 0.4% higher at Aus$6.99.