PotashCorp News: K+S Rejects New Takeover Offer

Potash Corporation of Saskatchewan (TSX:POT,NYSE:POT) was rejected earlier this month when it made a takeover offer for Germany’s K+S (FWB:SDF1). It bounced back Tuesday with a second offer, but was swiftly dismissed again by the European producer.
PotashCorp CEO Jochen Tilk met with Volker Bouffier, premier of the German regional state of Hesse, to hand over the company’s new offer, which would preserve jobs following a takeover. However, following the PotashCorp news, the local parliament said it is in favor of K+S staying independent, according to The Globe and Mail.
Meanwhile, a spokesperson from K+S told the Financial Post that the company has also seen the new documents and “concluded that they contain nothing substantial beyond what we had already been given in writing. That’s why we still see no basis for talks.”
The company has already said that PotashCorp’s offer of 7.9 billion euros, or 41 euros per share, is too low and has raised concerns that the Canadian producer is planning to shrink the size of K+S.
Bouffier also sees the offer as lackluster and believes that PotashCorp “has to know that what they have brought forward so far hasn’t been convincing. And they have to know that they won’t be received with open arms because we have concerns.”

New deal much the same

As mentioned, this is the second takeover attempt made by PotashCorp, but considering how similar it is to the first it is no surprise the German company rejected it. K+S CEO Norbert Steiner indicated that an offer of at least 50 euros per share would be more suitable, as per Bloomberg. K+S also wants to ensure job security for its current employees.
When K+S received the first offer, Steiner was very forward in a company press release, stating, “the proposed price of 41 Euro per share does not adequately 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.”
The project, which is located in Saskatchewan, is expected to produce its first tonnes of potash by the end of next year. K+S said that it has invested 2 billion euros into the project and noted that it is both on time and on budget.
K+S also said at that time that the offer from PotashCorp didn’t adequately consider the interests of its employees.
“PotashCorp has made no firm commitments to protect the interests of the more than 14,000 employees of K+S worldwide. Despite repeated requests to address this question, PotashCorp’s answers have remained vague. In Germany alone there are more than 30,000 direct and indirect jobs associated with the domestic raw material production and mining of mineral nutrients by K+S,” Steiner said in a press release.
K+S saw a share price boost when the initial offer was made, going up 30 percent. However, at the end of day Wednesday its share price was down 2.17 percent at 36.97 euros. PotashCorp’s share price also saw a dip, going down 1.38 percent to hit $36.56.
 
Securities Disclosure: I, Kristen Moran, hold no direct investment interest in any company mentioned in this article.
Related reading:
K+S Shoots Down Proposed Acquisition by PotashCorp
K+S Shares Up 30 Percent on PotashCorp Takeover Offer