GERMAN fertiliser producer K+S AG is buying Canada’s Potash One for C$434m (£266.8m), joining a rush for scale in an industry that will play a crucial role in feeding the world.
K+S’s C$4.50-a-share offer, a 31 per cent premium to the average price over the previous 10 sessions, comes less than three weeks after Canada blocked a $39bn hostile bid by BHP Billiton for Potash Corp, the industry’s dominant player.
Unlike that bid, K+S said its takeover would not be subject to a review under the Investment Canada Act. The law, which stipulates a foreign takeover must carry a “net benefit” for the country, was the basis of Ottawa’s rejection of BHP’s offer.
In K+S’s case, the value of Potash One’s assets – as opposed to the deal value – falls well short of Investment Canada’s C$299m threshold, said a lawyer specialising in foreign investment at a large Canadian law firm.
K+S said yesterday it made its cash offer for Potash One as it looks to build up new reserves to replace domestic deposits it expects will be depleted in about four decades.