K+S shares surge after Potash Corp takeover approach – by Arno Schuetze and Ludwig Burger (Reuters Canada – June 26, 2015)

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RANKFURT (Reuters) – Shares in German potash miner K+S SDFGn.DE leapt almost 40 percent on Friday after a takeover proposal from Canada’s Potash Corp POT.TO which sources close to the matter said was worth more than 7 billion euros ($7.8 billion).

K+S, which would become the first German blue-chip firm in a decade to be bought by a foreign company, said it was assessing its options after announcing the approach late Thursday. Two sources close to the matter said K+S would likely reject the proposal as too low.

K+S believes Potash Corp wants to take capacity out of an over-supplied market to boost its profitability, the sources said, adding the Canadian firm might also look to close some of K+S’s high cost German mines and sell its salt business.

Potash Corp is currently operating well below full capacity because of weak potash prices.

The sources said Potash Corp proposed to pay just over 40 euros a share, a 38 percent premium to K+S’s closing price on Thursday and 44 percent above the six-month moving average price, according to Thomson Reuters data.

At 0945 GMT, K+S shares were up 26.8 percent at 36.835 euros, after touching a three-year high of 40.285 euros.

K+S is the world’s fourth-largest potash maker, trailing the North American export pact Canpotex made up of Potash Corp, Mosaic MOS.N and Agrium AGU.TO, as well as Uralkali URKA.MM and Belaruskali.

Potash Corp’s bid is the latest move by a North American company on a European rival, as U.S. and Canadian firms take advantage of low interest rates and a weak euro to pursue new growth opportunities.

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