Potash Corp.’s K+S Bid Helped by Commodity Slide, Analysts Say – by Scott Deveau and Jack Kaskey (Bloomberg News – September 24, 2015)

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Potash Corp. of Saskatchewan’s 7.85 billion-euro ($8.77 billion) proposal to acquire its largest European competitor is more attractive after price declines in the Canadian company’s namesake crop nutrient, according to two analysts.

Potash Corp.’s cash offer made in June was rejected by K+S AG of Germany as too low. Since then, spot prices for potash in the U.S. have dropped 12 percent and there have been forecasts for further declines on the export market. On Monday, Mosaic Co., the largest U.S. producer, said it was cutting output and blamed weaker demand.

Share prices of potash miners have fallen accordingly. K+S is down 9.3 percent this month and closed at 30.22 euros in Frankfurt on Wednesday. That makes Potash Corp.’s 41-euros-a-share bid attractive, said Nils-Peter Gehrmann, an analyst with Hauck & Aufhauser, and Jeffrey Stafford at Morningstar Equity Research.

“While we’re certain management believes EUR 41 per share undervalues K+S, we think the offer considerably overvalues the company,” Chicago-based Stafford said in a note Tuesday. He said his fair value estimate for K+S is 24 euros a share.

Legacy Mine

Spokesmen for K+S weren’t immediately available for comment. A spokesman for Potash Corp. declined to comment on the impact of the potash price.

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