K+S Chief Doesn't View Morton Salt Deal As Defensive
October 05 2009 - 1:56PM
Dow Jones News
The head of K+S AG (SDF.XE) on Monday dismissed speculation that
its $1.68 billion purchase of Morton Salt was a defensive move to
ward off an acquisition threat from Potash Corp. (POT).
The purchase elevated the German mining group into the world's
largest salt producer by volume and provided a counterweight
against the collapse in demand for potash and related fertilizer,
its other core business.
Norbert Steiner, chief executive, said in an interview that
buying Chicago-based Morton was not a defensive move, despite the
persistent speculation linking the company with a bid from Potash,
its larger Canadian rival.
Morton Salt was divested by Dow Chemical Co. (DOW) to finance
its own purchase of chemicals group Rohm & Haas after
alternative funding fell through.
Steiner said Morton Salt provided stable cash flow until the
potash market "normalized" after a boom-and-bust over the past 18
months, something he didn't expect before 2011.
"[Salt] was able to step into the breach," said Steiner of its
existing unit's performance as potash demand and prices slid in the
first half of 2009 following last year's commodity boom.
The buy doubled its revenue from salt and expands its North
American footprint into the Midwest and Canada, alongside existing
operations in Europe, South America and Asia.
K+S executives said salt demand had remained stable through the
economic downturn. Its consumer segment had not suffered
cannibalization by private-label brands while the latest contract
renewals from U.S. state and municipal governments for use in
de-icing had been ahead of budget.
"We've not seen a recession," said Steiner of the salt
business.
He predicted that Morton Salt would have a "record" 2009, with
earnings before interest, taxes, depreciation and amortization
around the level seen last year. K+S expects the deal to be
accretive to earnings from 2010.
- By Doug Cameron, Dow Jones Newswires; 312-750-4135;
doug.cameron@dowjones.com