Grain retailers GrainCorp Ltd (ASX: GNC) and AWB Ltd (ASX: AWB) issued a joint statement on Friday announcing that the two companies are poised to merge their operations and end up as one of Australia's biggest agribusiness operators.

The statement said that GrainCorp is set to release to AWB shareholders one company share for every 5.75 AWB shares they hold, which will be subjected to a vote by the latter's shareholders.

Also, both companies said that the deal would lead to a nil premium merger with the exchange ratio to be based on the volume weighted average prices of shares by each entity from the past six months.

As a result, GrainCorp's shareholders would end up holding a 58 percent stakes in the new merged entity while AWB shareholders would be entitled to the remaining 42 percent, with the new company carrying a market capitalisation of about $2 billion.

Both companies said that the merger is projected to add up to earnings per share to be enjoyed by GrainCorp and WAB shareholders plus synergies in excess of $40 million every year.

The joint statement also said that directors of the two companies were unanimously supportive of the proposal with each board in agreement that the merged entity would be able to entice more investors which should lead to better stock liquidity, effective access to capital and operational efficiencies.