German minister backs K+S's Potash bid rejection

Sat Jul 4, 2015 1:38pm EDT
 
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FRANKFURT, July 4 (Reuters) - A German regional minister gave his backing to potash miner K+S's rejection of an $8.8 billion-euro takeover bid by Canada's Potash Corp of Saskatchewan, saying K+S should remain a German company.

Tarek Al-Wazir, minister of economy in K+S's home state of Hesse, said on Saturday he would support K+S's efforts to make sure regional jobs and value creation were not lost.

K+S has rejected a proposed bid by Potash of 41 euros per share, saying it was too low and warning its suitor could be planning to dismantle or shrink the salt and fertiliser company.

Al-Wazir said in a statement emailed by K+S: "We will continue to make efforts to ensure that K+S has a successful future in our state and we stand by K+S's side."

He added that limiting the environmental damage caused by mining would also be much harder to negotiate with a Canadian company. "For that reason, too, we have an interest in K+S's remaining a north Hessian company," he said.

K+S owns the Morton Salt brand and is the world's largest salt supplier but derives most of its earnings from potash.

It also has a Canadian mining project called "Legacy", the first new mine in the potash industry in almost 40 years, which is due to start producing by the end of 2016 amid growing capacity and competition among sellers.

Analysts believe Potash may want to slow the development of Legacy or close mines in Germany, where costs are higher, to prevent more potash coming onto the market.

Potash says its proposal is not based on closing mines or cutting jobs.

Al-Wazir's statement came after he met K+S's human resources head and its local works council chief.

K+S HR chief Thomas Noecker said: "We want domestic mining and the domestic production of vital mineral nutrients to remain possible and secure for the coming decades. We must reject initiatives that do not serve this interest, in our view." ($1 = 0.8999 euros) (Reporting by Patricia Weiss; writing by Georgina Prodhan; editing by Clelia Oziel)