Viterra to insure for crop disaster in ABB deal

SASKATOON, Saskatchewan, July 3 (Reuters) - Viterra (VT.TO: Quote, Profile, Research) plans to insure against weather-related crop disasters in South Australia if it completes its acquisition of Australia's ABB Grain Ltd (ABB.AX: Quote, Profile, Research), the Canadian grain handling and farm supply company said on Thursday.

The grain volume insurance, contingent on the ABB acquisition, would begin to pay out in case of a 33 percent drop in average annual South Australian grain production and would be fully paid out with a 65 percent drop in production. The maximum payout would be A$27 million ($21.7 million).

Viterra already has grain volume insurance for its current operations.

The combined company would remove a fee ABB currently charges farmers in difficult crop years for variations in grain volumes.

The two companies have also revised the storage and handling fees ABB charges farmers and will announce details if the acquisition completes.

Viterra has agreed to buy ABB in a $1.2-million cash and shares deal. The deal requires regulatory, shareholder and court approvals.

Viterra shares were up 0.8 percent Friday morning on the Toronto Stock Exchange to C$9.96. ABB shares were up 1.6 percent on the Australian Stock Exchange at A$9.40.

($1=$1.25 Australian)

($1=$1.16 Canadian) (Reporting by Rod Nickel; editing by Peter Galloway)