K+S says retail shareholders back rejecting PotashCorp

(Dave Bedard photo)

Frankfurt | Reuters –– German salt and fertilizer company K+S AG says a survey of its retail investors shows they strongly support its rejection of a 7.9 billion euros (C$11.4 billion) takeover offer from Canada’s PotashCorp.

K+S said on Monday it had surveyed retail, or non-institutional, shareholders, who hold about 30 per cent of its shares, and that more than 84 per cent of those who replied were in favour of rejection. About 28 per cent of retail shareholders responded to its questionnaire.

K+S did not say what percentage of its total shares opposed PotashCorp’s bid, according to the survey, but Scotiabank analyst Ben Isaacson said it was likely less than 10 per cent.

Isaacson, who covers both companies, said in a note that K+S would likely get different results from its institutional stockholders, who own most of the company and who might jump at the offer.

“It’s becoming seemingly inevitable that (PotashCorp) will need to take its bid directly to shareholders,” he said. A PotashCorp spokesperson declined comment.

“The prevailing view among (surveyed retail investors) is in line with that taken by the overwhelming majority of institutional investors that we are in touch with, and who also welcome the rejection of the PotashCorp proposal,” K+S finance chief Burkhard Lohr said.

PotashCorp has been pushing to talk with K+S management despite the German company’s initial rejection last month of the Saskatoon-based company’s bid, which is worth 41 euros (C$59) per share.

K+S lacks the protection of a big anchor investor, with nearly all its shares freely traded on the stock exchange, and the results of K+S’s survey provide the first real indication of how investors may respond to PotashCorp’s approach.

Only about four per cent of the more than 39,000 retail shareholders who participated in the survey said they would accept a 41 euros per share offer, K+S said.

“Our private shareholders have made their position clear,” CEO Norbert Steiner said in a statement. “They share the assessment of the K+S board of executive directors and supervisory board that the current PotashCorp proposal fails to reflect the fundamental value of K+S.”

K+S said it had contacted all its 140,000 retail shareholders in mid-July and more than 39,000 had participated in the survey.

Reporting for Reuters by Maria Sheahan in Frankfurt; additional reporting for Reuters by Rod Nickel in Winnipeg.

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