K+S’s ‘Friendly Solution’ With EuroChem Start of Deepening Ties

[ 13.10.09 12:46 ]

By Richard Weiss

Oct. 12 (Bloomberg) - K+S AG’s handing of a supervisory board seat to shareholder Andrei Melnichenko’s EuroChem could be the start of deepening ties between the two fertilizer companies, DZ Bank analyst Heinz Mueller said.

Giving a seat on the board to EuroChem director George Cardona is a likely prelude to Melnichenko increasing his stake, the analyst said.

“This is the friendly solution,” Mueller said. “A joint venture between EuroChem and K+S becomes more probable.”

Billionaire Melnichenko, who controls Moscow-based EuroChem, declared in April he had a 16 percent stake in K+S and said he would consider boosting that holding. The two companies are in talks over jointly developing part of the Verkhnekamskoye potash fields in central Russia.

EuroChem aims to start production in 2012.

Cardona replaced Uwe-Ernst Bufe, who resigned to make way for a EuroChem representative.

Norbert Steiner, chief executive officer of K+S, said in an interview on Aug. 31 that talks with EuroChem over operational issues were friendly, without providing details. K+S is Europe’s largest potash company.

Possible areas of cooperation may opening up new reserves, Mueller said.