PotashCorp has withdrawn its takeover plans of K+S, the German resources company said in a press release Monday.
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“In light of these market conditions and a lack of engagement by K+S management, we have concluded that continued pursuit of a combination is no longer in the best interests of our shareholders”, said Potash Corp. president and CEO Jochen Tilk.
The company is developing a $2.64bn mine in the western Canadian province of Saskatchewan, which is expected to produce around 2.9Mt of potash annually by 2023.
Potash Corp had originally bid €41.00 for each K+S share, but K+S management derided the offer as too low, and also cited fears that the Canadian market leader would force lay-offs in Europe.
Equinet analyst Michael Schaefer, who recommends that investors buy K+S shares, said the German company’s upcoming investor day on November 12 could be a good opportunity for management to try to persuade investors of its value.
PotashCorp blames micro economic conditions which have contributed to a significant decline of global commodity and equity markets.
Lutz Grueten, an analyst at Commerzbank AG said by telephone.
We rate POTASH CORP SASK INC (POT) a HOLD. “But we still believe the regulatory (issues) will always be challenging”, said Jackson.
Despite the current weakness of the potash markets, K+S still expects significant sales and earnings growth this year, the release said.
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In response to the price pressure, Mosaic Co. announced in September it would cut back production at its Colonsay potash mine in Saskatchewan.
