Germany's K+S confident bid for Canada’s Potash One will go through

10 December 2010 16:08  [Source: ICIS news]

TORONTO (ICIS)--Germany-based fertilizer major K+S is confident that its Canadian dollar (C$) 434m ($430m) bid for Potash One will not be blocked by Canadian regulators or the target’s shareholders, a spokesman said on Friday.

Last month, BHP Billiton’s high-profile $39bn bid for PotashCorp failed when Canada’s federal industry ministry blocked the deal, citing national interests.

However, Michael Wudonig, spokesman for Kassel-based K+S, said his company’s bid for Potash One was below a key threshold that prompts Canadian federal intervention in foreign takeovers, and as such would not need to clear that hurdle.

“We are only required to register our plan to take over Potash One, but there is no need for approval on the federal level for us,” Wudonig told ICIS.

A bidder would exceed the Canadian federal threshold if the takeover target’s net asset value exceeded C$299m, he said. The net asset value, and not K+S' C$434m offer price, was the decisive criteria for federal intervention under Canadian rules, he added.

Wudonig also said that unlike BHP’s bid for the world’s largest fertilizer producer, K+S’ target was a junior potash firm that had not yet begun producing.

With the deal, K+S would take over and develop Potash One’s greenfield potash project in Saskatchewan, creating jobs and investment in that province, he said.

Potash One shareholders are scheduled to vote on the deal next week, and K+S expected to close the deal by mid-January, he added.

Following Canada’s rejection of BHP’s hostile bid for PotashCorp last month, there has been uncertainty about the way the federal government will apply the rules in future deals. 

Before BHP, Canada approved all but one out of more than 1,600 foreign takeovers of Canadian firms since the relevant legislation, the Investment Canada Act, came into force in 1985 - including the foreign takeovers of resources firms Inco, Faclonbridge and Alcan, as well as NOVA Chemicals.

($1 = C$1.01)

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By: Stefan Baumgarten
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