D.he prospect of a quick sale of the American salt business drove the K + S share price up at the beginning of the week. The price rose recently by around 18 percent to 7.15 euros. The fertilizer and salt producer is apparently about to sell its American subsidiary Morton Salt. According to a report by the Bloomberg news agency, Morton Salt will go to competitor Kissner Group for around three billion dollars or the equivalent of almost 2.6 billion euros.
According to analyst Markus Mayer from Baader Bank, the sales proceeds would have been higher than the market average had expected. In July, the possible sales price was estimated at 2 billion euros. K + S initiated the sales process a long time ago. In the first round, a number of financial investors had expressed their interest. Originally, a partial IPO was also considered.
On the one hand, K + S produces potash and magnesium salts for fertilizers, and on the other, a business with salts for other applications: with table and de-icing salt, for example, and special salts for industry. The group had built up this second leg in order to make itself less dependent on the traditional fertilizer business. Two major acquisitions in South and North America were decisive for this: first that of the Chilean Sociedad Punta de Lobos (SPL) in 2006, then that of Morton Salt in the United States in 2009.
After the sale, K + S will lose around one third of the group turnover. With the money on the sale, K + S wants to lower the high level of debt, which is why the transaction is also considered an emergency sale. The debts result mainly from the billion dollar construction of a mine in Canada, called “Bethune”. As a potash mine for fertilizer products, despite its geographical location, it is included in the “Europe + operating unit”, in which K + S bundles its fertilizer business.
The company had not been able to sufficiently reduce the debt through proceeds from the operating business. Prices on the potash fertilizer markets fell and winters were mild, which adversely affected the de-icing salt business.
The price of the K + SA share had soared before the financial crisis, rose to around 90 euros at the time and then fell massively. After a recovery, the price swung into a downward trend from 2011 and fell to an all-time low of EUR 5.104 in the course of the Corona crisis. Baader Bank continues to recommend the K + S share as a buy with a price target of EUR 8.