K+ S investors say Potash Corp. offer falls short
K+ S AG, which rejected a $ 8.6 billion US takeover approach from Potash Corp. of Saskatchewan Inc., said both private and institutional shareholders support management’s stance and agree the offer falls short.
The German supplier of potash and salt polled private investors holding about 30 per cent of its shares, and the prevailing view is in line with the “overwhelming majority of institutional investors” that K+ S has contacted who also back its rejection of the offer, it said in a statement on Monday.
“Our private shareholders have made their position clear,” chief executive Norbert Steiner said. They share the assessment that the current Potash proposal fails to reflect the fundamental value of K+ S, Steiner said.
Potash Corp. is struggling to gain traction in its pursuit of K+ S, which also owns the Legacy potash project in Saskatchewan that’s set to produce 2 million metric tons of the crop nutrient by 2017. A letter from the company to K+ S detailing job guarantees and the appointment of a third- party monitor to uphold takeover promises failed to sway the board.
More than 39,000 of the about 140,000 private shareholders who were contacted participated in the survey, K+ S said.
“K+ S really hit a nerve,” judging by the response rate, Christa Seja, a professor at Hochschule Hannover university said. The survey will be representative of private shareholders, she said.
Ben Isaacson, a Toronto- based analyst at the Bank of Nova Scotia, said the survey represents a “minority of a minority” of shareholders.
K+ S sent the survey to retail investors holding about 30 per cent of K+ S shares with only 28 per cent of them responding, or 8.4 per cent of the overall shares, Isaacson said.
He said he expected a similar survey of the company’s institutional investors would yield a much different result.
“We can’t see why any institutional K+ S shareholder wouldn’t jump at the opportunity to cash in at 41 euros a share,” he said in a note to clients.
Any rejection of Potash Corp.’ s proposal may simply be based on an emotional attachment to the company, Isaacson said.