(New throughout, adds details, background, updates share price)
June 25 (Reuters) - German potash producer K+S said on Thursday it has received a takeover proposal from larger Canadian rival Potash Corp of Saskatchewan Inc, starting a new takeover saga in the fertilizer industry.
K+S said it was assessing its options. A source close to the matter said K+S will likely reject the 7 billion euro ($7.8 billion) takeover offer as too low. Potash Corp would not comment.
It is Potash Corp's second bid for K+S. A bid to acquire a majority stake in K+S in 1997 was blocked by the German competition watchdog. In 2010, Potash Corp itself was the target of a $39 billion hostile bid from global mining giant BHP Billiton . That deal too was foiled after the Canadian government stepped in to block it.
Since then, the once tight global potash market has become over-supplied. Miners have built out capacity and competition among sellers has heated up since the 2013 breakup of Belarussian Potash Company (BPC), one of the world's biggest potash trade partnerships.
The German company's shares were up 13.3 percent at 32.45 euros in after-hours trading in Frankfurt. The shares had closed 1.5 percent higher at 29.05 euros after the regular trading session before the report came out.
Potash Corp shares finished up nearly 5 percent in New York at $31.89 and more than 4 percent in Toronto at C$39.33.
Potash Corp is finishing a more than $8-billion expansion program that should free up cash flow and is reviewing its stakes in China's Sinofert Holdings Ltd, Israel Chemicals, Jordan's Arab Potash Co PLC and Chile's SQM.
Potash Corp is operating below full capacity because of weak prices since the breakup of BPC partners Uralkali OAO and Belaruskali.
$1 = 0.8931 euros Reporting by Harro ten Wolde, Arno Schuetze, Euan Rocha and Rod Nickel; Editing by Elaine Hardcastle; Editing by David Goodman and David Gregorio