* Potash Corp had offered 41 euros per share in cash
* K+S had refused to negotiate, deeming bid too low
* K+S was sceptical of Potash Corp's assurances on jobs
* Shares in K+S drop 25 percent
(Adds statement from K+S, shares closing price, adds link to
Breakingviews column)
By Greg Roumeliotis and Arno Schuetze
NEW YORK/FRANKFURT, Oct 5 (Reuters) - Potash Corp of
Saskatchewan POT.TO said on Monday it had withdrawn its
7.9-billion-euro ($8.9 billion) offer for German rival K+S
SDFGn.DE , citing a decline in global commodity and equity
markets and a lack of engagement by K+S management.
Shares in K+S closed down 25 percent after the Canadian
company announced the decision, wiping almost 1.5 billion euros
off its market value.
An acquisition of K+S would have given Potash Corp an
opportunity to realise savings from selling potash within North
America from its own Western Canada mines and from K+S's Legacy
mine, which is under construction in the region.
However, senior K+S executives dismissed the Canadian firm's
41-euro-per-share cash bid - which represented a 59 percent
premium to the volume-weighted average of K+S's share price
during the previous 12 months - as too low and refused to
negotiate.
The German potash producer said on Monday it remained upbeat
on its long-term prospects. "This step creates clarity," said
K+S Chief Executive Norbert Steiner. "We are convinced that we
can successfully develop our company based on a consistent
implementation of our two-pillar strategy in the long term. We
are strong in potash and in salt."
The company said it expected significant sales and earnings
growth this year, despite the current weakness of the potash
market.
Since Potash Corp made its offer to K+S privately at the end
of May, shares of K+S peers have dropped by around 40 percent
amid concerns over weakening demand from China, the world's
largest consumer of potash.
'DISAPPOINTMENT'
"We withdrew our proposal, frankly, with some disappointment
as the strategic rationale for the transaction was compelling in
our view," Potash Corp Chief Executive Jochen Tilk said in a
letter to K+S's supervisory board dated Oct. 4, which was
obtained by Reuters.
"Nonetheless, in light of the market conditions ... and a
lack of engagement by K+S management, we have concluded that the
pursuit of a business combination with K+S is no longer in the
best interest of Potash Corp's shareholders," he said.
(For the Potash Corp CEO's letter please click on: http://graphics.thomsonreuters.com/15/PotashCorp.pdf)
K+S had voiced fears that Potash Corp could dismantle the
company and eliminate jobs, and that its pledges to the contrary
were too vague. Potash Corp argued that its proposal was not
based on closing mines, curtailing production, selling K+S's
salt business or cutting jobs.
"This will increase pressure on K+S management to come up
with measures to improve the value of K+S in this challenging
commodity environment," Baader Bank analyst Markus Mayer said.
Equinet analyst Michael Schaefer, who recommends that
investors buy K+S shares, said the German company's upcoming
investor day on Nov. 12 could be a good opportunity for
management to try to persuade investors of its value.
Potash Corp meanwhile plans to focus on its growth strategy,
according to people familiar with matter who asked not to be
identified as the matter remained confidential.
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BREAKINGVIEWS-Potash selloff shows flaws in K+S takeover
defence: ID:nL3N12513Y
Potash Corp CEO's letter: http://graphics.thomsonreuters.com/15/PotashCorp.pdf
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