Potash Corp. confident of K+S bid, could raise if more value seen – by Pachelle Younglai (Globe and Mail – July 8, 2015)

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Potash Corp. of Saskatchewan Inc. is confident K+S AG shareholders would accept its $8.7-billion (U.S.) bid, but is open to raising the offer if its German rival could reveal more value not currently seen by the Canadian company, according to a source close to the deal.

K+S has rejected Potash Corp.’s offer of €41 ($45 U.S.) a share, saying it is too low and grossly undervalues its Legacy potash project in Saskatchewan. K+S has said it believes Legacy alone is worth €21 a share, which has led some analysts to speculate that K+S is looking for an offer of about €50 a share.

The source characterized that amount as inconceivable and said there was no chance that such an offer would materialize given the average takeover premium in Germany is 32 per cent and Potash Corp. is offering a 57-per-cent premium to K+S’s share price over the past year.

The source said Potash Corp. believes the current offer is a full price and that it has broad shareholder support. However, the source said that if K+S gave Potash Corp. access to its books and the Canadian company found more value, it could raise the bid.

“If we sit down and do due diligence and they can demonstrate some incremental value to us, we might have an extra euro for them. I wouldn’t rule that out,” said the source, who is close to Potash Corp.

Potash Corp.’s current bid represents a 40-per-cent premium to the K+S stock price the day before the offer became public in June. K+S is now trading at €36.87 a share, 10 per cent lower than Potash Corp.’s offer price.

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