Graincorp has joined the deal spree among Australia's grain handlers by announcing the Aus$757m (US$655m) purchase of United Malt Holdings, the world's fourth-largest maker of malt used to make beer and whisky.

Graincorp said that the acquisition, for which it is paying in cash and shares, would make it "less susceptible to seasonal variations" which are inherent in handling grain, a market hurt badly when drought slashed Australia's wheat output, driving the group into losses in 2007 and 2008.

"For a number of years, Graincorp has been examining ways of making company earnings more robust," chairman Don Taylor said.

"United Malt Holdings achieves this goal by increasing and diversifying Graincorp's future earnings."

Besides Australia's Barrett Burston Malting, an existing Graincorp customer, United Malt includes operations in Canada, the UK and the US. It supplies malt to brewers including Foster's Group.

"The acquisition… makes Graincorp an international agribusiness," Mr Taylor said.

Spate of activity 

The deal follows the announcement last month that rival AWB that it was seeking a partner for grain handling. Also, ABB Grain, which also has a malt operation, finalised its takeover by Canada's Viterra.

Meanwhile, United Malt's private sector owners, Australia's Champ and US-based Castle Harlan, have long been viewed as seeking to sell the group, which they put together from companies bought three years ago from ConAgra Foods and South Africa's Tiger Brands.

United Malt was reported in March last year to be heading for a Aus$500m stock market flotation.

Earnings forecast raised 

Graincorp said it would pay for the deal through a Aus$489m issue of new shares, a separate Aus$100m placement and US$200m in debt.

It added that it was raising its full year earnings forecast to Aus$60m-63m, from an earlier range of Aus$53m-63m.

The increase, the third this year, reflected a "strong" July-to-September period, chief executive Mark Irwin said.

Graincorp shares, which closed on Monday at Aus$8.39, were suspended before the announcement.