Nov. 7 (Bloomberg) -- Saskatchewan Wheat Pool Inc., Canada's second-biggest grain handler, said it plans to make an unsolicited offer for bigger rival Agricore United to cut costs and improve efficiency.

Saskatchewan Wheat Pool is offering 1.35 of its shares for each Agricore share, Regina, Saskatchewan-based Wheat Pool said today in a statement. The offer values Agricore at C$9.33 a share, or C$423.8 million ($375 million), a 13 percent premium to Winnipeg-based Agricore's last-traded price.

``This is an offer to have a discussion with Agricore about a combination of the two companies,'' Schmidt said on a conference call with investors. ``Our goal is to operate the most efficient grain handling operation to port.''

Under the proposed transaction, Agricore shareholders would own about 47 percent of the company with an estimated market value of C$1.2 billion and combined revenues of C$4.3 billion, Schmidt said. The proposal includes a cash offer for each Agricore preferred share.

``This combination would begin to deal with some of the overcapacity'' in grain handling in Western Canada, Schmidt said, suggesting the combination would generate cost ``synergies'' of C$60 million. He said grain handlers have about a quarter more capacity than required by farmers.

Wheat Pool decided to go public with the offer after broaching the subject with executives of Agricore, Canada's largest grain handler, in a letter dated Oct. 24.

The announcement came after the close of regular trading on the Toronto Stock Exchange where shares of Saskatchewan Wheat Pool fell 6 cents, or 0.9 percent, to C$6.91. They have risen 17 percent in the past year. Agricore fell 5 cents, or 0.6 percent, to C$8.24. The stock has gained 17 percent from a year ago.

Agricore is 23 percent owned by Decatur, Illinois-based Archer Daniels Midland Co., the world's largest grain processor.

To contact the reporter on this story: Christopher Donville in Vancouver at pmckiernan@bloomberg.net

Last Updated: November 7, 2006 18:42 EST