TORONTO (miningweekly.com) – Canada’s Potash Corporation of Saskatchewan (PotashCorp) has reiterated its intentions to buy German rival K+S, saying it is prepared to make binding commitments to motivate its target’s management, which has so far rebuffed the unsolicited offer. 

PotashCorp president and CEO Jochen Tilk told analysts on Thursday on a conference call to discuss the company’s second-quarter results that the two companies would bring together complementary assets with minimal overlap of operations and markets.

“The combined company would be well positioned to serve marketplaces throughout the world and further expand into emerging markets like Africa,” he noted.

Should a deal materialise, PotashCorp would commit to complete K+S’s C$4.1-billion Legacy project, near Bethune, Saskatchewan. Production from the operation would be managed as part of the company’s Saskatchewan portfolio and Legacy product would be shipped through Canpotex, the market cartel of Canada’s biggest potash miners PotashCorp, Mosaic and Agrium, to offshore markets though the company’s distribution platform of railcars, warehouses and port facilities.

The Legacy project would be the first new potash mine built in Saskatchewan in nearly 40 years and was expected to produce up to two-million tonnes of crop nutrient by the end of 2017. K+S had already invested more than €2-billion in the project, which was on time and on budget. The first tonnes of potash were expected from the mine by the end of 2016, with positive cash flows generated from 2017 onwards.

However, K+S had earlier this month rejected the unsolicited offer of €41 a K+S share, saying the proposal, valued at €7.9-billion, did not adequately reflect the fundamental value of K+S’s potash and magnesium products and salt business, and completely disregarded the value of the Legacy project.

Further, K+S charged that PotashCorp had no sustained interest in continuing the German fertiliser and salt businesses in their current form, having made no firm commitments to protect the interests of the more than 14 000 employees of K+S worldwide.

“Because of the compelling strategic benefits, our proposal is not predicated on job cuts, mine closures or selling a salt business. Our plan would be to operate the German potash mines and salt business in the same manner as K+ S, uphold existing environmental obligations, preserve the K+ S brand and maintain K+ S's headquarters,” Tilk said, adding that PotashCorp would continue to seek a constructive dialogue with K+ S to pursue a friendly transaction.

Q2 RESULTS
For the three months ended June 30, PotashCorp earned $417-million, or $0.50 a share, down 11% year-on-year as a result of weaker nitrogen prices, brought about by increased output and lower demand.

Revenues slipped 8.5% to $1.73-billion compared with $1.89-billion a year earlier.

PotashCorp narrowed its outlook for the year, expecting potash sales to be 9.3-million tonnes to 9.6-million tonnes, which was lower than the previous forecast of between 9.2-million tonnes and 9.7-million tonnes.

Further, the company dropped the top-end of its full-year earnings-a-share guidance to between $1.75 and $1.95, down from earlier guidance for earnings of between $1.75 and $2.05 a share.

PotashCorp’s TSX-listed stock had lost 16% since the start of the year, but traded 1.14% higher on Friday at C$35.57 apiece.