By Neetha Mahadevan
FRANKFURT--K+S AG said on Thursday that sturdy second-quarter
results show its strengths as an independent fertilizer and salt
producer.
But the Germany company remains open to a tie-up with Potash
Corp. of Saskatchewan if the terms of the Canadian group's
unsolicited offer change.
"The results reinforce our strong belief that K+S will have a
great future as a stand-alone business," said Chief Financial
Officer Burkhard Lohr.
K+S, which rejected a second near-$9 billion approach from
Potash Corp. last week, reported a 46% rise in after-tax profit to
EUR118.7 million ($130.6 million) in the three months to end-June
from EUR81.1 million in the same period last year.
Earnings before interest and taxes rose 14% to EUR179.2 million
on a 16% rise in revenue to EUR914.4 million, boosted by better
prices for deicing salt in North America and the euro's weakness
against the dollar.
"The strong performance reinforces our guidance of a significant
earnings increase this year," K+S Chief Executive Norbert Steiner
said.
K+S said it isn't opposed to a merger with Potash Corp. in
principle.
"We aren't at all blocking a potential transaction," said Mr.
Lohr. As well as the question of price, there was too much
uncertainty in the terms of Potash Corp.'s latest informal offer.
"We are waiting for additional reliability."
Potash Corp. has proposed roughly EUR7.9 billion, or EUR41 a
share, unchanged from a June proposition, to buy K+S. Additional
reassurances on jobs and sites haven't convinced the German company
to engage in negotiations.
"Both [K+S's supervisory and management] boards are extremely
concerned that Potash appears to have no sustained interest in
continuing the strategically, technically and financially linked
fertilizer and salt activities in their current structure," K+S
said in its second-quarter report.
The German company spelled out more detailed earnings guidance
for the full-year. It now expects operating earnings of EUR780
million to EUR860 million, versus EUR641 million in 2014 and
revenue of EUR4.35 billion to EUR4.55 billion in 2015, versus
EUR3.82 billion last year.
K+S said earlier this week that individual shareholders are
lining up with the German potash and salt producer's institutional
investors to oppose the potential takeover, according to a
shareholder survey it conducted.
Wednesday, the company released a promotional video of its
Legacy potash-mining project in the south of the Canadian province
of Saskatchewan. Bankers and analysts have said that Potash Corp.
is especially interested in the mine because it would help the
company gain production capacity and pricing power in negotiations
with farmers.
The takeover fight comes amid weakness in global potash prices
particularly since 2013 when Russia's Uralkali pulled out of a
sales partnership with Belarus. Regional sales alliances had
previously kept potash prices high.
K+S and Potash Corp. both mine potash and a tie-up would create
a business that could control as much as 30% of the global
market.
Even if the two companies agree on terms, the combination could
face antitrust scrutiny. Germany's cartel office blocked Potash
Corp.'s attempted to take over K+S in 1997 as it was being spun off
from chemicals group BASF.
K+S's Mr. Lohr declined to comment on possible antitrust risks
but said that combining two of world's five biggest potash
suppliers was sure to attract regulators' attention.
Write to Neetha Mahadevan at neetha.mahadevan@wsj.com
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