Potash Corp. of Saskatchewan Inc.’s decision to walk away from its 7.85 billion-euro ($8.8 billion) proposal to acquire Germany’s K+S AG caps a year of frustration for the Canadian fertilizer producer, during which it floated various scenarios for combining the companies’ mining operations.
K+S’s unwillingness to engage with Potash Corp. in any meaningful way was ultimately behind the Canadian firm walking away, the person said.
‘Strategic Logic’
Potash Corp. first approached K+S Chairman Norbert Steiner and Andreas Radmacher, a member of the company’s supervisory board, about year ago to discuss a possible joint venture involving both companies’ Canadian potash operations, according to a letter addressed the board Sunday that was obtained by Bloomberg.
"This concept was rejected outright by K+S management," Potash CEO Jochen Tilk wrote in the letter. Over the next 12 months, Potash Corp. floated several other cost-cutting concepts to K+S’s board, including “potash swaps” between Legacy and Potash Corp.’s operations in New Brunswick, according to the letter, all of which were rejected by K+S.
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"None of the proposed concepts led to engagement by K+S management despite the powerful industrial and strategic logic for both our respective companies, shareholders and customers," Tilk said in the letter.
A spokesman for Potash Corp. declined to comment on the ending of the takeover offer beyond the company’s statement. No one at K+S immediately responded to requests for additional comment.
‘Creates Clarity’
The withdrawal of the takeover offer will probably have come as a surprise to at least some investors. Just last week, Deutsche Bank AG’s asset and wealth management unit urged K+S management to start talks with its would-be suitor. And another K+S investor, Acatis Investment GmbH, said Sept. 24 it increased its stake, betting the stock was undervalued and that Potash Corp. would renew its offer.
K+S dropped 25 percent to 23.34 euros at 4:34 p.m. in Frankfurt. Potash Corp,. rose 2.2 percent to C$27.57 ($21.06) in Toronto.
K+S said in a statement Monday it remains steadfast that the unsolicited proposal from Potash Corp. didn’t reflect the fundamental value of the company.
“This step creates clarity. We are convinced that we can successfully develop our company based on a consistent implementation of our two-pillar strategy in the long term,” K+S’s Steiner said in a statement. “We are strong in potash and in salt.”
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