Ger­man com­pany re­jects Po­tashCorp takeover of­fer

Saskatchewan firm’s $10.9-bil­lion bid called too low

The Guardian (Charlottetown) - - BUSINESS - THE CANA­DIAN PRESS

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.

CP FILE PHOTO

Potash pro­ducer K+S AG is re­ject­ing a takeover of­fer by Potash Corp. of Saskatchewan Inc. (TSX:POT). Jochen Tilk, pres­i­dent and CEO of Po­tashCorp, speaks to share­hold­ers dur­ing the com­pany's 2014 an­nual gen­eral meet­ing in Saska­toon.

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