Agrium's lack of experience in commodities, especially in a country prone to drought, represents a "key risk" should the fertilizer and farm supplies group succeed in its $1.1bn bid for Australian grain handler AWB, analysts have warned.

Canada-based Agrium, which achieves profit margins of 11.6% on its rural services chain, has highlighted in its approach the potential for sprucing up AWB's agricultural supplies network, whose comparable margin has fallen to 3%.

However, AWB's far larger Australian grain distribution and handling operations, which Agrium chief executive Mike Wilson said he also planned to retain, could pose difficulties for a group with limited experience in the sector or the geography, analysts at National Bank said.

Mr Wilson has said he may dispose of AWB's international commodities management business.

'Lack of experience'

"A key risk involves entry into commodity management, which is new segment for Agrium," the Canada-based broker said.

"Agrium management does not have experience in this segment."

Australian agribusinesses faced threats including the risk of drought, deregulation of the grain handling industry, and "poor profitability across the Australian agricultural retail industry" - issues which had faced Viterra since the Canadian grain handler bought AWB rival ABB Grain last year.

National also flagged that Agrium was, at 14.2 times forecast earnings before interest, tax, depreciation and amortisation this year, paying a higher multiple than Viterra paid for ABB, although this might change if a huge stash of unpaid bills at AWB gets paid.

Viterra bid? 

In Australia, broker Wilson HTM highlighted how AWB had made nine acquisitions totalling $3.5bn over the past five years, and that the rural services unit offered "immediate retail scale in a new, attractive agricultural market".

However, it also flagged the potential for an alternative bid, while adding that "the magnitude of Agrium's proposal� means any rival offer would need compelling synergies and/or value accretion to justify trumping the Agrium proposal".

UBS analyst Lachlan Parker flagged the potential for Viterra to enter a higher offer.

"Combining the Viterra ex-ABB Grain trading business with AWB's trading and logistics function could increase the synergies on offer above anything Agrium could achieve," he said.