K+S/Potash Deal Can Still Happen, Chances Are Lower: Berenberg
2015-08-28 06:49:52.816 GMT
By Chiara Remondini
(Bloomberg) -- For deal to succeed, it needs radically
different approach from Potash Corp. as its shareholders are not
supportive of cash deal, Berenberg says in note dated yday.
* Berenberg now sees reduced probability of 50% that deal with
K+S will happen vs 80% before
* Brokerage says K+S requires price of EU45 to engage, sees
all-share offer as more likely option “to get deal done,”
with double listing in Germany, Canada
* Double listing may calm some political opposition, as K+S
would keep strong German footprint
* Berenberg says all-shr deal may be structured with existing
K+S holders having 32% of capital, broadly in line with
Ebitda contribution, assuming combined entity trading at 8x
Ebitda
* Expects prices in potash industry to continue to gradually
decline, cites 5% capacity CAGR in 2015-20 with demand down
by 10% y/y in 2015, deterioration of several currencies of
key potash importers (China, India, Brazil) vs USD
* Pressure on pricing should increase suppliers’ ambitions
to consolidate market shares
* NOTE Aug. 13: K+S CFO Said Price Is Main Objection to Potash
Corp Bid; Co. Will Review Any New Potash Corp Proposal
“With Utmost Care”
For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>
To contact the reporter on this story:
Chiara Remondini in Milan at +39-02-8064-4241 or
cremondini@bloomberg.net
To contact the editor responsible for this story:
Gaurav Panchal at +44-20-3525-0511 or
gpanchal2@bloomberg.net
2015-08-28 06:49:52.816 GMT
By Chiara Remondini
(Bloomberg) -- For deal to succeed, it needs radically
different approach from Potash Corp. as its shareholders are not
supportive of cash deal, Berenberg says in note dated yday.
* Berenberg now sees reduced probability of 50% that deal with
K+S will happen vs 80% before
* Brokerage says K+S requires price of EU45 to engage, sees
all-share offer as more likely option “to get deal done,”
with double listing in Germany, Canada
* Double listing may calm some political opposition, as K+S
would keep strong German footprint
* Berenberg says all-shr deal may be structured with existing
K+S holders having 32% of capital, broadly in line with
Ebitda contribution, assuming combined entity trading at 8x
Ebitda
* Expects prices in potash industry to continue to gradually
decline, cites 5% capacity CAGR in 2015-20 with demand down
by 10% y/y in 2015, deterioration of several currencies of
key potash importers (China, India, Brazil) vs USD
* Pressure on pricing should increase suppliers’ ambitions
to consolidate market shares
* NOTE Aug. 13: K+S CFO Said Price Is Main Objection to Potash
Corp Bid; Co. Will Review Any New Potash Corp Proposal
“With Utmost Care”
For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>
To contact the reporter on this story:
Chiara Remondini in Milan at +39-02-8064-4241 or
cremondini@bloomberg.net
To contact the editor responsible for this story:
Gaurav Panchal at +44-20-3525-0511 or
gpanchal2@bloomberg.net