K+S mandates banks to divest Americas operating unit

14:38 PM | March 11, 2020 | Natasha Alperowicz

K+S open-pit salt mine in Chile.

K+S (Kassel, Germany) said today that it has decided to divest its Americas operating unit to reduce debt and to realign the company. It has mandated banks to sell the business, which includes the salt operations in North and South America, Morton Salt, and K+S Chile. The business has a “unique” position in the salt market with leading brands with high customer loyalty and solid cash flows, the company says. Its 2-million metric tons/year Bethune, Canada, potash mine is not part of the package. The company said in December that it is exploring options for its operations in North America.

 

The business on the block had net sales last year of €1.532 billion ($1.74 billion) and EBITDA of €230 million. The company tells CW that it expects to achieve EBITDA multiples of more than 10 times. The sale as well as other measures will allow K+S to reduce debt by “significantly more than €2 billion.” K+S tells CW that it is seeing a broad portfolio of interested parties and initial talks have already been held. Signing is expected in 2020.

 

The sale will be accompanied by a comprehensive realignment of K+S, with all the company’s sites expected to achieve a sustainable positive free cash flow. The company will focus on fertilizers and specialties in the future. “Following the repositioning of K+S, we will be focusing on the expansion of the highly profitable fertilizer specialties business in the subsequent growth phase,” said Burkhard Lohr, chairman of K+S.  

 

K+S’s EBITDA last year rose by 6% to €640 million on flat sales of €4 billion. “2019 was another very challenging year for us. Following a good start in the first half of the year, the weakening of the potash market as well as the mild winter in Europe impacted our business development over the further course of the year,” Lohr said.