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K+S rebuffs fresh bid overtures from Canada's PotashCorp

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German potash miner K+S rebuffed a fresh $8.6bn takeover overture from rival PotashCorp, dismissing as "not effectively enforceable" the Canadian group's proposals to tackle concerns of job losses and site closures.

K+S said that it was "still convinced" that the E41-a-share offer restated on Friday in a letter from PotashCorp "does not at all reflect the fundamental value of K+S".

Norbert Steiner, the K+S chief executive, added that "this is true for our existing business but in particular for the value contribution of our Legacy project," the greenfield potash mine the group is developing in Canada.

"For this reason alone, also the new proposal of PotashCorp is not in the best interest of the company," Mr Steiner said.

'Not effectively enforceable'

Nor did measures proposed by PotashCorp to address fears that a K+S takeover would lead to redundancies and mine closures cut any ice.

Proposals in the PotashCorp letter, which was not released, "do not provide reliability," K+S said, flagging undisclosed "restrictions" on some assurances.

Furthermore, PotashCorp's "commitments… "are not effectively enforceable".

K+S said that its "concern remains unchanged that the transaction proposed by PotashCorp puts jobs at risk and that sites and raw material production in Germany might not be maintained".

'Binding commitments'

PotashCorp, while confirming that it had sent the letter, declined to comment further.

However, the fresh approach follows comments last week from Jochen Tilk, the PotashCorp chief executive, that a takeover of K+S offered "compelling strategic benefits" which would provide "greater stability and more opportunities for career growth" for the German group's staff.

"Our proposal is not predicated on job cuts, mine closures or selling a salt business," Mr Tilk told investors.

"Our plan would be to operate the German potash mines and salt business in the same manner as K+ S, uphold existing environmental obligations, preserve the K+ S brand and maintain K+ S's headquarters in European headquarters."

"To that regard, we are prepared to make binding commitments that provide these assurances."

'Full and fair value'

On the pricing of the outline offer, Mr Tilk said that "we believe our E41-per-share proposal… provides full and fair value.

"It represents a 57% premium relative to the 12-month average stock price prior to the proposal and a premium significantly above other comparable transactions.

PotashCorp shares stood 0.3% lower at Can$35.27 in morning deals in Toronto, while in Frankfurt, K+S stock stood up 0.8% at E37.01 in late trading.


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