K+S to buy Canadian potash miner Potash One for C$434m

22 November 2010 16:19  [Source: ICIS news]

LONDON (ICIS)--Kali & Salz (K+S) has agreed to buy Canadian junior potash miner Potash One for approximately Canadian dollar (C$) 434m (€312m, $425m) in cash, or C$4.50 a share, as the group looks to access dwindling reserves of the crop nutrient, the German fertilizer producer said on Monday.

The deal would give K+S, which has been facing pressure to secure new reserves as demand for potash picks up, access to several potash exploration licences Potash One has for the Canadian province of Saskatchewan.

These included the Legacy Project, an advanced greenfield project to develop a potash solution mine that could yield as much as 2.7m tonnes/year of potassium chloride, the group said.

The all-cash offer is a 31.3% premium over Potash One's 10-day weighted average trading price, as well as a 24.3% premium on the closing price of Potash One shares on the Toronto Stock Exchange on 19 November 2010, K+S said.

“The offer complements our growth strategy to expand our potash capacities and our average mine life,” said Norbert Steiner, chairman of the board of executive directors at K+S.

“Furthermore, the new potash assets together with our existing domestic potash sites will enhance our international competitiveness and as a result strengthen the K+S Group overall, in Europe as well as overseas,” Steiner added.

K+S said that the expected production capacity of up to 2.7m tonnes would lead to approximately $2.5bn investment in Saskatchewan and the creation of up to 300 highly skilled jobs. The group expected initial production to start no earlier than 2015.

The board of Potash One unanimously recommended the deal to its shareholders.

“Today's announcement delivers on our commitment to maximise value for Potash One shareholders while eliminating further risks inherent in developing and funding the Legacy Project,” said Paul Matysek, president and CEO of Potash One.

K+S said it hoped the transaction would close in the first quarter of 2011. It added the transaction was not subject to a "net benefit to Canada" review under the Investment Canada Act.

The directors and officers of Potash One have agreed to tender about 21% of the Potash One shares to the offer.

K+S shares were trading at €48.19 on the Xetra stock exchange at 16:03 GMT, down 2.19% from the previous close.

(€1 = C$1.39, $1 = C$1.02, $1 = €0.73)

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By: Franco Capaldo
+44 (0)20 8652 3214

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