Sale price represents 12.5 times the company’s 2019 EBITDA of $257 million.
The price tag, to be paid in cash at closing, represents 12.5 times the 2019 earnings before interest, taxes, depreciation and amortization of $257-million, K+S said.
“With the sale of our Americas salt business, we are taking a giant step in reducing debt. We are thus creating a solid financial basis for the sustainable development of the company,” chairman of the board of executive directors, Burkhard Lohr, said in the statement.
The Americas business mainly comprises K+S Chile, formerly known as the Chilean company, acquired in 2006, as well as Morton Salt (USA) and K+S Windsor Salt (Canada), acquired in 2009.
Kissner is a producer and supplier of salt controlled by holding company Stone Canyon Industries Holdings (SCIH), Mark Demetree and affiliates.
“The combination of the Americas salt business with SCIH’s Kissner Group Holdings allows us to expand our product offerings to consumers along with our existing government and commercial customers,” James Fordyce, Co-CEO of SCIH, noted.
Potash prices not helping
The closing of the transaction, which will allow K+S to focus on potash fertilizer products, is expected to occur in summer 2021. That’s why is also implementing other measures to reduce debt, which should strengthen its balance sheet by more than 2 billion euros ($2.3 billion) by that time, Lohr said.
The company had to slash production in 2019 in response to weak demand for potash, following the lead of rivals such as Nutrien (TSX:NTR).
In 2015, K+S fended off a 7.9 billion euro takeover bid from Nutrien, at the time called Potash Corp of Saskatchewan, of 41 euros per share.
Potash stockpiles are at a record high, which means it will be months before demand for fresh supply picks up, CRU senior potash analyst, Humphrey Knight, told MINING.COM earlier this year.
As a result, spot prices are expected to remain subdued until late 2020.
