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The chief financial officer of K+S AG said his firm is not opposed in principle to a merger with Potash Corp. of Saskatchewan Inc., despite its total rejection of the US$8.6-billion takeover proposal.
“Don’t get me wrong: We aren’t at all blocking a potential transaction,” chief financial officer Burkhard Lohr said on an earnings conference call on Thursday.
Potash Corp. is offering 41 euros a share, and K+S says that this is far too low. But the German firm also claims a takeover could be bad for its home country, as Potash Corp. could shutter domestic production.
If German politicians end up supporting that argument, Potash Corp.’s proposal may get effectively blocked. While there is no known mechanism for the government to block the bid, it would be difficult to do such a big transaction without at least some political support.
K+S argues that it is only logical for Potash Corp. to close its European mines. The potash market is oversupplied, and Potash Corp.’s Saskatchewan output is lower-cost than what K+S has in Europe.
Potash Corp. says a K+S takeover would provide valuable diversification and that it has no plans to close any of the firm’s operations. To assuage concerns about job losses in Germany, Potash Corp. offered commitments to keep the mines open for several years.
K+S complained that these promises are not enforceable. “Every promise has to be reliable,” Lohr said. “What we have received is not reliable.”
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