Potash Talks Up K+S Bid While Saying It's Not Actively Engaged

  • Tilk also met with investors to pitch them on deal's merits
  • CEO says potash supply-demand gap may be smaller than thought

Potash Corp. of Saskatchewan Inc. Chief Executive Officer Jochen Tilk talked up the the benefits of the fertilizer producer’s proposed $8.8 billion takeover of German rival K+S AG while also saying it isn’t “actively engaged” in a bid.

A deal is more attractive now than when the offer was initially made in June, Tilk said Wednesday in a presentation at an industry conference organized by Credit Suisse Group AG. He noted that the Canadian company has sent a number of letters to K+S in an attempt to engage in takeover talks. Potash Corp.’s 41-euro-a-share offer for K+S was rejected in July as too low.

Also on Wednesday, Tilk pitched investors on the deal at a New York meeting, according to one person present, who asked not to be identified because the gathering was private. The CEO said that the proposed acquisition would give Potash Corp. greater leverage over potash prices with a larger market share, the person said.

Acquiring K+S would allow Potash to expand geographically, particularly into the "attractive" European market, Tilk said in his conference presentation, which was webcast. Most importantly, he said, it would help maximize returns at the K+S Legacy potash mine in Saskatchewan, which is scheduled to begin production next year.

"We’re not actively engaged" in the bid, Tilk said in the presentation. "We’re very quiet about it. Our objective is to make our strategic points."

Hostile Bid?

Analysts at Germany’s Bankhaus Lampe said Wednesday that Potash Corp. may soon make a hostile bid.

K+S erased earlier gains and fell as much as 1.8 percent in Frankfurt after his comments, eventually closing 0.2 percent lower at 33.58 euros. Potash Corp. shares rose 1.6 percent to C$33.62 in Toronto.

Ulrich Goebel, a spokesman for K+S, declined to comment on Tilk’s conference presentation. A spokesman at Potash Corp. declined to comment on the investor meeting.

Tilk also spoke at the conference about the market for potash, which currently faces a production surplus. He said the gap between demand and supply may be smaller than thought because industry operating capacities might have been overstated, although not maliciously.

"When you run it at 60 percent to 70 percent most of your time, you think you have that much," Tilk said. "But when you really crank it up, it’s a little bit like revving an engine up that never ran at that RPM."

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