March 24, 2010 / 9:25 AM / 9 years ago

UPDATE 1-K+S upbeat as European fertiliser season begins

* CEO says takeover approach would be hard to fend off

* March price hike accepted by potash wholesalers - CEO

* Says to review full-year sales volume outlook in May

(Adds details, background)

FRIEDEWALD, Germany, March 24 (Reuters) - K+S SDFG.DE, the world’s fourth-largest potash supplier, said it would be hard to fend off a takeover approach as the fertilizer sector witnesses a frenzied consolidation.

Asked about recent market speculation that K+S may become an acquisition target, CEO Steiner said: “Technically speaking, it’s extremely difficult to fend off a takeover.”

So far the German fertilizer maker, which traces its roots to a late 19th-century salt mine, has steered clear of a takeover battle that has gripped the industry.

U.S. fertiliser producer Terra Industries TRA.N accepted a $4.68 billion takeover bid from national rival CF Industries (CF.N), which beat out Norwegian nitrogen specialist Yara (YAR.OL).

K+S shares rose this month on renewed market speculation that Yara may now eye K+S. [ID:nLDE62G0UO]

K+S said it was upbeat about its sales as demand from fertiliser wholesalers continues to revive even after a price hike this month.

The German fertilizer said in January the price of potash, its main product, may have bottomed out after cutting prices to 285 euros ($384) per tonne for European farmers, its main customer group.

It also said at the time it would raise prices to 295 euros per tonne this month.

“The first half of the year is shaping up to be good in terms of sales volumes. We’ll make a review in May to see whether we need to increase our full-year sales outlook of 6 million tonnes,” added Joachim Felker, the head of the group’s fertiliser unit.

Demand for potash has been hit hard by the economic downturn as investors rushed into, and later abandoned, agricultural commodities. Potash lasts longer in the soil than fertilisers like nitrogen, giving farmers leeway to delay its use when they foresee falling prices, which has aggravated swings in demand.

K+S’ long-term shareholders BASF BASF.DE and Russian tycoon Andrei Melnichenko hold more than a quarter of K+S’s shares between them.

A spokesman for former K+S parent BASF, which holds 10.3 percent of K+S shares, recently reiterated that even though the holding was purely financial, BASF plans to hold on to the stake.

Melnichenko, who holds about 15 percent in K+S and has a board representative, said last year it had no plans to sell. [ID:nLC787825]

K+S itself has said it would focus on finding a joint-venture partner to set up new potash mines abroad to secure long-term growth as its German potash mines are expected to be depleted in roughly 40 years.

The CEO declined to comment on the progress of such talks. (Reporting by Ludwig Burger and Andreas Kroener)

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