Shares in Calgary-based Agrium Inc. lost two per cent Monday after the company's weekend announcement of a $1.14-billion Cdn bid to acquire Australian grain marketer AWB Ltd.

Shares of the fertilizer giant were down $1.37 at $68.70 late in the session on the Toronto Stock Exchange.

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Agrium's all-cash offer would give AWB shareholders $1.39 a share.

The all-cash offer would give AWB stockholders $1.39 a share.

Agrium said Saturday it was in discussions with AWB to come up with a proposal that the AWB board of directors could recommend to its shareholders.

The Australian company is already being pursued by local grain handler GrainCorp Ltd.

In a statement to the Australian Securities Exchange, AWB said its merger implementation deed with GrainCorp remained in place, with the directors continuing to support that deal.

AWB said in a release Monday it intends to carry on discussions with Agrium, but cautioned shareholders that those talks may not lead to a deal with the Canadian company.

"Accordingly, at this stage, the merger implementation deed with GrainCorp. remains on foot and AWB directors have not withdrawn or modified their previous recommendation that shareholders vote in favour of the merger with GrainCorp," the release said. 

Under its agreement with GrainCorp., AWB can only entertain another offer if it is deemed to be superior.

GrainCorp's offer, made July 30, is an all-share merger in which AWB shareholders would get one GrainCorp share for every 5.75 AWB shares, valuing each share at $1.01 Cdn.

Bond rater reviews Agrium's risk

Also Monday, credit rating agency DBRS said it is reviewing its BBB senior debt rating for Agrium as it considers the implications of the AWB bid.

"Although DBRS believes the transaction may complement Agrium's existing retail business and would enhance its business presence in Australian and New Zealand markets, the presence of a competing proposal, the uncertainty with respect to the final form of the transaction and the lack of clarity of financing details have resulted in today's rating action," DBRS said.

Earlier this year, Agrium scrapped a protracted attempt to acquire CF Industries Holdings Inc., a large U.S. fertilizer company.

With files from The Canadian Press