The stock of German potash mining company K+S has lost almost a quarter of its value following the announcement by its Canadian rival PotashCorp to drop plans for an 'unsolicited' takeover bid.
Shares in K+S plunged 23 percent in opening trade on Monday, dropping to 23.81 euros a share. The stock came under pressure as Canada's PotashCorp scrapped plans for a tie-up with K+S estimated to be worth about 8 billion euros ($9 billion).
In a statement published Sunday, the Canadian group said it was withdrawing its 41-euros-per share offer, because of a "significant decline of global commodity and equity markets" as well as a lack of engagement by the German management.
K+S, which is also a leading world producer of potash for fertiliser, rejected PotashCorp's unsolicited 7.85 billion-euro takeover bid in July, and spurned a renewed bid at the same price in August, saying it was too cheap and "puts jobs at risk."
PotashCorp chiefexecutive Jochen Tilk said in the statement that the group's proposal reflected "full and fair value," and was predicated on a "collaborative process with access to customary due diligence."
"Since that time, challenging macroeconomic conditions have contributed to a significant decline of global commodity and equity markets, with potash peer stocks down almost 40 percent," Tilk added. "In light of these market conditions and a lack of engagement by K+S management, we have concluded that continued pursuit of a combination is no longer in the best interests of our shareholders."
Potash, trapped in layers of salt, is the key ingredient in many fertilisers. It is a market believed to have enormous potential as the world tries to feed a growing population. But the industry has been forced to adapt to a sharp fall in prices, sparked three years ago by the collapse of a de facto oligopoly, in which a few firms exerted control over the market.
uhe/sri (dpa, AFP, Reuters)