Israel’s generic crop protection company Makhteshim Agan Industries Ltd. has signed a letter of intent to buy US company Albaugh Inc., which operates in the same field, for $1 billion.

Makhteshim, a unit of Nochi Dankner’s IDB group, announced that it will purchase Iowa-based Albaugh for $340 million in cash, $455 million in notes, and 59 million Makhteshim Agan shares, and will assume up to $280 million of Albaugh debt.

Albaugh is a leading player in the US, Mexico, Argentina and Brazil, and was founded in 1979 by Dennis Albaugh, who owns the whole company.

The acquisition is conditional upon the successful completion of due diligence, the signing of a binding agreement, and approval of both companies’ boards, and it is subject to regulatory clearances in the US, Europe, and other jurisdictions. Makhteshim Agan, which announced it was looking for acquisitions earlier in the year, expects the transaction to close in the fourth quarter of 2010.