Potash Corp. of Saskatchewan Inc. has made a bid for Germany's K+S AG fertilizer company, the European-based miner said.
K+S, which is building a big potash mine in Saskatchewan, said the Canadian company has submitted a proposal to acquire all of its shares. Potash Corp., the world's biggest fertilizer producer, also indicated it may go hostile – it told K+S's board it may make an offer to shareholders depending on certain conditions.
K+S said it was "assessing the available options."
The German company did not disclose terms of the offer. German newspaper Handelsblatt reported the offer could be worth €40 ($55) per share, valuing the miner at around €7-billion ($9.7-billion).
K+S has a market capitalization of around €5.6-billion and is Europe's main potash supplier. Shares in K+S leapt as much as 40 per cent on Friday.
This is the first bold move for Potash Corp.'s new chief executive officer Jochen Tilk, who has been on the job for one year and is grappling with a more competitive potash market.
Potash Corp., two other North American producers and the Russian-Belarus potash cartel used to have considerable influence over prices because they controlled about 70 per cent of the market. But after Russia's Uralkali killed the cartel, the market became more competitive. Potash Corp. will soon face more competition from other sources of fertilizer, including from K+S's new potash mine, which is called Legacy and expected to start production next year. The acquisition would give Potash Corp. a solid base in Europe, where K+S is the dominant producer and supplier of the crop nutrient.
Before Mr. Tilk joined, Potash Corp. rejected a multibillion-dollar deal from BHP Billiton in 2010. BHP is also in the early stages of building a potash mine in Saskatchewan, but has been vague on when or whether it will complete the mine.