K+S rejects takeover bid

German chemical and salt company K+S has rejected the acquisition proposal made by Canadian fertilizer giant PotashCorp.

The German firm, with salt mining operations in northern Chile and a sea salt facility in Brazil, said the unsolicited offer to acquire all of its shares "does not reflect the fundamental value of K+S and is not in the best interest of the company."

K+S said that Potash's offer - of 41 euros per shares, totaling some US$8.7bn - undervalues its potash and magnesium products and its salt business and that it disregards the company's Legacy potash project located in Saskatchewan.

The firm said that its Canadian project is the first greenfield in the potash industry in almost 40 years, and has received investments of over 2bn euros (US$2.219bn). K+S expects first production at Legacy by end-2016 and positive cash flow from 2017 onwards.

Regarding its salt business, K+S said that through its Salt 2020 strategy the company expects to increase operating profits of up to 250mn euros by 2020.

PotashCorp defended the offer, saying the transaction would create "two best-in-class companies with minimum overlap to create a global producer in the nutrient industry," and that its offer "is not predicated on closing mines, curtailing production, selling the salt business or cutting jobs."

Potash CEO Jochen Tilk said in a statement that the company seeks to meet with K+S management as soon as possible to "jointly discuss our commitments and further specify the details that would form the basis of a successful combination."

Potash is one of the world's largest fertilizer groups. In Latin America, it holds a 32% in Chilean non-metallic and fertilizer group SQM.