Australian wheat exporter AWB Ltd has said that it is in merger talks with rival ABB Grain Ltd.
The proposed deal is likely to create the nation's largest wheat and barely exporter with a market capitalisation of about A$2.45B.
"The transaction will only progress if appropriate terms can be agreed and due diligence is completed to each party's satisfaction," AWB said in a statement.
A possible merger would give both companies geographic diversification and a wider product mix. It would give AWB access to ABB's strategic ports, storage and handling assets while ABB would gain access to AWB's distribution lines to farmers through AWB's Landmark rural services businesses.
AWB owns a lending business to farmers, 22 grain depots, a 50% stake in the Melbourne Port Terminal and divisions in India, Brazil and Switzerland. Its Landmark division, with 400 outlets, is Australia's largest distributor of farm merchandise and fertiliser.
ABB Grain owns Joe White Maltings, which controls about 9% of the global market for the beer-making ingredient. It has 113 depots, a 50% stake in Australian Bulk Alliance and operations in Ukraine and New Zealand.
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