The board of executive directors and the supervisory board of German mining company K+S rejected the unsolicited proposal of Potash Corporation of Saskatchewan to acquire all outstanding shares of K+S Aktiengesellschaft for 41 euros per share.
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The proposed transaction does not reflect the fundamental value of K+S and is not in the best interest of the company, the company said.
Norbert Steiner, CEO of K+S, said: “Jointly with the Supervisory Board we have come to the conclusion that the proposed price of 41 Euro per share does not adequately reflect the fundamental value of K+S. Not only does this proposal undervalue our potash and magnesium products and our salt business, it completely disregards the value of our Legacy Project.
"The book value alone represents 11 Euro per share; considering future earnings we calculate a value of up to 21 Euro per share. This is not yet reflected in the share price.”
K+S has already invested more than 2 billion Euro in the project which is on time and on budget. The first tonnes of potash will be produced by the end of 2016 and positive cash flows will be generated already from 2017 onwards.
“We believe PotashCorp is trying to take advantage of the valuation gap to take over K+S and gain control over Legacy,” Steiner added.
Furthermore, the K+S executive board and the supervisory board are also convinced that the proposed transaction is not in the best interest of the company. In addition, it does not adequately consider the interests of employees worldwide or the interests of the regions in which the company operates responsibly.
“PotashCorp has made no firm commitments to protect the interests of the more than 14,000 employees of K+S worldwide. Despite repeated requests to address this question, PotashCorp’s answers have remained vague.
"In Germany alone there are more than 30,000 direct and indirect jobs associated with the domestic raw material production and mining of mineral nutrients by K+S.” Steiner said. ■
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