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K+S shares rebound after PotashCorp restates bid interest

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Shares in K+S rebounded after Canada's PotashCorp restated its interest in buying the German potash group – saying it had been "encouraged" by a rejection of its overtures.

The shares - which eased in the last session after K+S rejected the PotashCorp offer as too low and "vague" on its implications for employees - rebounded by 4.6% to E38.715 in morning deals in Frankfurt, among its highest levels since the approach was announced last week.

The increase followed a statement early on Friday by PotashCorp saying it was "encouraged by K+S' response" to its bid, pitched at E41 a share, saying the German group's objections to the offer could be overcome.

"Many of the matters raised have already been addressed in previous correspondence or can be addressed if K+S were to agree to meet with company representatives," PotashCorp said.

'Minimal overlap'

While K+S had cautioned over the threat of job losses from a merger, PotashCorp highlighted the "minimal overlap" between the two companies – implying limited potential for cutting out duplicated functions.

A deal "creates greater opportunities and security for all employees", said Jochen Tilk, the PotashCorp chief executive.

"Management and employees of K+S are critical to the future performance of the combined company and we look forward to working collaboratively to address any issues."

The Canadian group also downplayed ideas it might divide off K+S's salt business, saying that its offer "is not predicated on closing mines, curtailing production, selling the salt business or cutting jobs".

K+S said on Thursday it had "not been suitably convinced" that PotashCorp had a "sustained interest in continuing the fertilizer and salt businesses in their current form, which are strategically, technically and economically intertwined".

'Compelling proposal'

Mr Tilk added that "we believe that the combination of our two companies would create a well-capitalised, more diversified company across products, geographies, production, distribution and customers.

"We are seeking to meet with K+S management at the earliest possible opportunity so that we can jointly discuss our commitments and further specify the details that would form the basis of a successful combination."

However, the statement did not directly address an objection by the German group that the offer "does not adequately reflect the fundamental value of K+S", including that of its Canadian mine, Legacy, which is set to start producing potash next year.

PotashCorp said it had "put forward a compelling proposal to negotiate a transaction".


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