K+S rejects Potash Corp's takeover approach as too low
By Ludwig Burger
FRANKFURT (Reuters) - German potash miner K+S SDFGn.DE rejected Potash Corp of Saskatchewan's (POT.TO: Quote) 7.9 billion euro ($8.7 billion) takeover bid on Thursday, saying it was too low and that the Canadian suitor could be planning to dismantle the company, putting jobs at risk.
K+S, owner of the Morton Salt brand, said the proposal lacked firm commitments to protect the more than 14,000 K+S employees worldwide and that it had no trust in "vague" pledges that had been made.
The takeover offer of 41 euros per share "completely disregards" K+S's Canadian mining project, known as "Legacy", which should be worth up to 21 euros per share when future cash flows from 2017 onwards are taken into account, the German company said.
K+S, which is the world's largest salt supplier but derives most of its earnings from potash fertilisers, also said it was not convinced that Potash Corp was interested in continuing the German group's fertilizer and salt businesses in their current form.
K+S shares closed down 2 percent in Frankfurt at 37.02 euros after the offer was rejected.
K+S Chief Executive Nobert Steiner said the Canadian company was bound to slash K+S's current production of potash.
"Potash Corp sites in Canada produce at significantly lower costs than our German sites. But they are under-utilized. Obviously, it makes ultimately little sense for Potash Corp to operate our German sites at the current level," Steiner said in a video posted on the company's website.
The offer values the German group's equity at 7.85 billion euros, or 9.5 billion euros when net debt of 1.65 billion euros is included. Continued...