Canadian mining giant Potash Corp to buy German rival K+S AG for nearly €8 bn
30 June 2015
Canadian mining giant Potash Corporation of Saskatchewan Inc plans to buy smaller German rival K+S Aktiengesellschaft AG for nearly €8 billion ($8.8 billion).
PotashCorp, the world's largest potash producer and the third-largest producer of nitrogen and phosphate, yesterday said that it has made a private proposal to buy K+S.
''There is no certainty that any offer will ultimately be made or as to the terms on which such an offer might be made,'' the Saskatchewan, Canada-based company said in a statement.
''PotashCorp does not intend to make any additional comments on this matter at this time unless and until it is appropriate to do so, or a formal agreement has been reached,'' the statement added.
PotashCorp has offered to pay around €41 per share, valuing the Kassel-based company at close to 8 billion ($8.8 billion), according to several media reports.
K+S is Europe's largest supplier of potash and the world's largest salt producer.
The deal will give PotashCorp the Legacy Project of K+S in the Canadian province of Saskatchewan and its market-leading salt business.
The Legacy potash mine and production facility is coming up near Moose Jaw, which contains 50 per cent of the world's potash reserves at an estimated cost of over $4 billion and will be the first new greenfield potash mine built in Saskatchewan in nearly forty years.
Construction of the potash mine began in June 2012 and production is expected to commence from 2016. Production of potassium chloride (KCl) from the mine is anticipated to reach two million tonnes in 2017, reaching full capacity of 2.86 million tonnes by 2023.
K+S posted revenues of €3.8 billion in 2014, of which potash and magnesium business generated €1.8 billion and the salt business €1.77 billion.
PotashCorp, was the target of a $38.6-billion hostile takeover bid from Anglo-Australian mining giant BHP Billiton in 2010, but saved by the Canadian regulator vetoing the deal (See: Canada says no to BHP's $40-bn hostile bid for Potash Corp).
It is one of Canada's most valuable companies with a market capitalisation of around $25.8 billion and annual revenues of $8.2 billion.
The company holds a 22-per cent of the world's potash production capacity, 2 per cent of nitrogen production capacity and 6 per cent of phosphate supply.
It holds the rights to mine 773,474 acres of land in Saskatchewan; and 58,263 acres of land in New Brunswick in Canada.
Nearly 60 per cent of the world's potash supply is in the hands of Canpotex, a North American cartel jointly owned by PotashCorp, Calgary-based Agrium, a leading global producer of fertilisers, Mosaic Canada Crop Nutrition, a subsidiary of the US phosphate, and potash giant The Mosaic Company.
Potash Corp supplies Canpotex with 53.6 per cent
Potash prices have fallen from a high of $480 a tonne in 2011 to $307 a tonne due to over capacity and Canpotex Russian and Belarusian rival cartel OAO Uralkali disbanding its group in 2013.