UPDATE 2-Canada's Viterra to buy Australia ABB for $1.2 bln

* Viterra offer values ABB Grain at about A$1.6 bln

* ABB directors approve deal

* ABB shareholders to vote in September

* Viterra would gain access to Asia growth markets (Adds company and analyst's comment)

SASKATOON, Saskatchewan, May 19 (Reuters) - Canada's top grain handler, Viterra Inc (VT.TO), said on Tuesday it has reached an agreement to buy Australia's ABB Grain Ltd (ABB.AX) for $1.2 billion in cash and stock, giving Viterra access to growth markets in Asia.

Viterra's (VT.TO) acquisition of ABB Grain Ltd (ABB.AX) would add "meaningfully" to earnings in the new company's first year of operations, Viterra President and Chief Executive Mayo Schmidt said.

"There's not a better combination in the world today," Schmidt said in a conference call with analysts. "We're going to take this to the finish line."

The deal values ABB shares at A$9.11-A$9.41, a premium of up to 9.4 percent from ABB's last traded price. The offer includes a special A$0.41 a share cash dividend to be paid by ABB.

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ABB directors have unanimously approved the deal and recommended their shareholders vote for it in the absence of a better offer. Shareholders are set to vote in September.

Buying ABB would help Viterra lower its transport costs by shipping grain from Australia to Asia, instead of from Canada. The two companies estimate synergies of about A$30 million ($23.3 million) a year from the deal.

The new company -- the name of which has not been determined -- would have the geographic advantages of crop supply from different hemispheres, hedging it against weather-related risk. Access to the Asian market is seen as key, with Schmidt saying that Asia's imports of wheat, barley and canola will increase 39 percent over 10 years.

The acquisition would be only the first step in further consolidation of the industry globally, Schmidt said. The new company would be willing and able to make further acquisitions based on strong balance sheets and low leverage, he said, with the most attractive companies being those in value-added grain processing.

Viterra would have room on its balance sheet to make further acquisitions in Australia such as Graincorp Ltd, analyst David Newman of National Bank Financial, said in a note to clients.

The deal comes after ABB ended merger talks in December with Australia's AWB Ltd (AWB.AX), and is the latest consolidation play in the Australian grain market following deregulation last year, when AWB lost its monopoly over wheat exports.

Layoffs are "not part," of the expected synergies, Schmidt said. He said there would also be minimal changes in management at the two companies, with the registered headquarters remaining in the Canadian Prairie city of Regina, Saskatchewan, with Australian, New Zealand and Southeast Asian operations based in Adelaide.