German company rejects PotashCorp takeover offer
Saskatchewan firm’s $10.9-billion bid called too low
Potash producer K+S AG has rejected a C$10.9 billion takeover offer by Potash Corp. of Saskatchewan Inc. (TSX:POT), saying the bid is too low and not in its interest.
The German company says its board of executive directors and supervisory board concluded that the offer of 41 euros per share does not reflect the fundamental value of K+S.
“Not only does this proposal undervalue our potash and magnesium products and our salt business, it completely disregards the value of our Legacy Project,” K+S CEO Norbert Steiner said in a statement Thursday.
The company is building the Legacy potash project in southern Saskatchewan and it is expecting production to begin in mid-2016.
It has already spent two billion euros on the project, which it says is the first potash mine to be developed from scratch in 40 years.
K+S said Legacy's book value alone represents 11 euros per share and that considering future earnings, it calculates a value of up to 21 euros per share, which it says is not yet reflected in the share price.
“We believe PotashCorp is trying to take advantage of the valuation gap to take over K+S and gain control over Legacy,” Steiner said.
K+S also said that despite repeated requests PotashCorp made no firm commitments to protect the interests of its more than 14,000 employees worldwide.
The proposed offer valued K+S at about 7.85 billion euros or about C$10.9 billion. K+S saw its share price jump from around 29 euros to 38 euros on news of the takeover offer last week.
PotashCorp declined to comment.