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PotashCorp says not actively discussing K+S takeover

(Dave Bedard photo)

Reuters — PotashCorp is not actively discussing its takeover proposal with Germany’s K+S, but remains interested in a combination of fertilizer producers that would aid North American potash sales and offer new access to Europe, CEO Jochen Tilk said Wednesday.

PotashCorp’s standing offer of 7.9 billion euros (C$11.75 billion) or 41 euros per share is appealing to K+S shareholders, Tilk said at an investors’ conference in New York organized by Credit Suisse.

“It was attractive when we made it (in July). Marketing conditions have changed, we think it’s even more attractive now,” he said. “I will not put words in K+S shareholders’ mouths but I think most of them feel that is an appropriate offer in terms of premium.”

A K+S spokesman declined to comment.

Shares of K+S dipped after Tilk’s comments and closed down 0.2 per cent in Frankfurt. Potash shares were up 1.8 per cent in New York and up 1.3 per cent in Toronto on Wednesday afternoon.

PotashCorp’s interest in K+S comes as the overbuilt potash industry struggles with low prices.

China imposed a value-added tax this month that will make potash modestly more costly to its rice farmers, Tilk said. Recession in Brazil and the U.S. dollar’s strength are also hurting producers, he said.

K+S, EuroChem and others, meanwhile, are building new mines. K+S, for one, is setting up a potash project in Saskatchewan, PotashCorp’s home province.

“The next five years will be somewhat challenging in terms of supply and demand,” Tilk said.

Negotiations with China look to be “tough” for a 2016 potash supply contract, Tilk said.

A takeover would give PotashCorp a chance to realize savings from selling potash within North America from its own Western Canada mines jointly with potash from K+S’ Legacy mine, under construction at Bethune, Sask., northeast of Moose Jaw, Tilk said.

Saskatoon-based PotashCorp made a fresh attempt in July to entice K+S into takeover talks, but the salt and fertilizer company rejected it.

Earlier that month, K+S rebuffed PotashCorp’s offer as too low and suggested the suitor was planning to shrink the company.

Germany’s Handlesblatt reported last week that a hostile bid was imminent, but Scotiabank analyst Ben Isaacson said in a note on Tuesday that there appeared to be little interest in Germany in a deal.

Rod Nickel is a Reuters correspondent covering the agriculture and mining sectors from Winnipeg.

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