UPDATE 2-Australia's Graincorp buys United Malt for $655 mln

* GrainCorp to become international agribusiness

* Latest deal in changing Australia grain industry

* Funding via share issue, placement and debt (Adds CEO, chairman comments, detail)

By Bruce Hextall

SYDNEY, Oct 6 (Reuters) - Australia's GrainCorp Ltd (GNC.AX) is spending $655 million to buy United Malt Holdings, the world's fourth-largest commercial malt-maker, as the grain firm scrambles to build a global presence and fight off competition.

GrainCorp said on Tuesday that the acquisition, to be partly funded by an issue of new GrainCorp shares at A$5.65 each, would transform it into an international agribusiness with operations in Australia, the United States, Canada and the United Kingdom.

Australia's grain industry is changing rapidly as local firms strive to gain size and diversify in the face of increased competition from global giants such as Cargill Inc CAR.UG, after a decades-old wheat-marketing monopoly ended last year.

"There's certainly the possibility that we will see further transactions that will consolidate companies, particularly globally, as the grain industry, and agriculture, generally, is really becoming a global industry," said Ross Macmillan, an analyst at stockbroker E.L. & C Baillieu.

Last month, former monopoly AWB Ltd AWB.AX said it was talking to an unidentified major global commodities firm to team up on selling grains globally.

Earlier this year, Canadian grain handler Viterra VTO.TO paid $1.4 billion for Australian wheat and barley exporter ABB Grains Ltd.

UMH comprises four companies: Great Western Malting in the United States, Canada Malting, Barrett Burston Malting in Australia and Bairds Malt in Britain. Private equity firms Castle Harlan and CHAMP bought the businesses in September 2006 from Conagra Foods.

UMH supplies malt for beer and whisky to some of the world's largest brewers and distillers. It produces about one million metric tonnes a year. Only Cargill and French firms Malteurop Group and Groupe Souflett have larger capacities.

CHAMP Director John Haddock said in a separate statement that UMH, given its current plant expansion programme, is well-positioned to continue strong growth globally."

GrainCorp Chief Executive Mark Irwin said it was buying UMH on a multiple of 5.7 times earnings before interest, tax, depreciation and amortisation (EBITDA), and the acquisition would provide further growth opportunities, particularly outside Australia.

"The business hasn't been under-invested and in fact, through their endorsement, it was looking to effectively lift capacity from one million tonnes a year up to approximately 1.2 million tonnes by 2011," said Irwin.

Irwin said GrainCorp's expanded malt business was expected to contribute 43 percent of the group's EBITDA, compared with 23 percent from grain storage and logistics operations, 17 percent from grain ports, 15 percent from grain trading and 2 percent from milling.

The investment comes as GrainCorp is returning to profit after two years of heavy losses as its grain business suffered from the worst drought in more than 100 years across eastern Australia, where the firm's businesses are concentrated.

GrainCorp tweaked its net profit forecast for the year to Sept. 30 upwards to between A$60 million ($53 million) and A$63 million from an Aug. 3 forecast of A$53 million to A$63 million.

It will fund the acquisition through a 9-for-10 issue of new shares, a separate A$100 million placement of new stock and a $200 million debt facility. The placement and offer are fully underwritten by Credit Suisse (Australia).

GrainCorp shares last traded at A$8.39. Trading has been halted until the capital raising is complete. ($1=A$1.139) (Editing by Jonathan Standing and Clarence Fernandez)