Canadian Manufacturing

PotashCorp still hoping to make a deal after K+S rejects takeover bid

Company confident it can address issues, but maintains its offer price



SASKATOON—Potash Corporation of Saskatchewan’s offer of approximately 7.9-billion euros, or $11-billion dollars, to takeover German potash producer K+S has not gone according to plan.

K+S announced July 2 that it had rejected the unsolicited takeover proposal, which offered shareholders 41 euros per share.

“The proposed price of 41 euro per share does not adequately reflect the fundamental value of K+S,” the company’s CEO Norbert Steiner, said.

“Not only does this proposal undervalue our potash and magnesium products and our salt business, it completely disregards the value of our Legacy Project. The book value alone represents 11 euro per share; considering future earnings we calculate a value of up to 21 euro per share. This is not yet reflected in the share price,” he added.

The company also said PotashCorp has made no firm commitments to the company’s workforce or its ongoing projects.

PotashCorp is hitting back against these claims, however.

In a statement, the world’s largest potash and fertilizer company said the deal would combine two best-in-class companies with minimal overlap and create a global producer that would create long-term value to stock holders, employees an the communities where both companies operate.

“We believe that the combination of our two companies would create a well-capitalized, more diversified company across products, geographies, production, distribution and customers,” PotashCorp CEO, Jochen Tilk, said.

“We believe this creates greater opportunities and security for all employees. Management and employees of K+S are critical to the future performance of the combined company and we look forward to working collaboratively to address any issues, including safeguarding the interests of employees and communities,” he added.

PotashCorp outlined that the bid is not predicated on closing mines, curtailing production, selling the salt business or cutting jobs.

Though PotashCorp said it is confident it can address the concerns of K+S, it did not sweeten the deal. It said the 41 euro price represents a 57 percent premium to the volume weighted average share price during the prior 12 months, and offers shareholders certain value.

The company hopes to meet with the K+S management team at the earliest possible opportunity to jointly discuss the deal.

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