Potash Corp. of Saskatchewan Inc. stuck to its 7.85 billion-euro ($8.6 billion) bid for K+S AG, prolonging an impasse with the German fertilizer company that’s so far snubbed the chance to negotiate with its suitor.
The Canadian supplier of fertilizer sent a letter to the K+S board detailing its 41 euro-a-share offer, the Kassel, Germany-based company said in a statement. Potash thinks K+S’s suggestion that it’s worth 50 euros per share is unwarranted, people familiar with the situation said last month.
K+S rejected today’s bid, which came after Potash sought to garner support for a takeover from German lawmakers. Sending a letter to K+S’s board, rather than to shareholders, is a sign Potash isn’t prepared to go hostile, said Marc Gabriel, a Bankhaus Lampe analyst.
“The market and K+S had both expected a higher offer,” said Gabriel. “This is a confirmation that they want a friendly takeover. It’s basically a game of poker in the quiet summer months.”
Potash confirmed it sent a letter to K+S management, without specifying its content. The Canadian company won’t be commenting further at this time, it said in an e-mailed statement. Shares of K+S, which reports second-quarter results on Aug. 13, gained 0.8 percent to 36.99 euros as of 4:44 p.m in Frankfurt.
Sticking to the original offer price may be an attempt to put pressure on K+S’s management and stock price, according to a note by brokerage Baader-Helvea. Potash traded 0.3 percent lower at $26.92.
The proposed price “does not at all reflect the fundamental value of K+S,” Chief Executive Officer Norbert Steiner said in the statement. “The new proposal of PotashCorp is not in the best interest of the company.”
Efforts to persuade German lawmakers of the merits of a deal made little ground. The Hesse state’s governing Christian Democrat Union and Green parties argued in the local parliament last month in favor of K+S staying independent and keeping its headquarters in Kassel.
“They didn’t sent it to all shareholders, just to the executive and supervisory boards,” Gabriel said. “I’d have expected them slowly to approach shareholders, because they’ll be the ones who ultimately decide.”