Canada’s Potash Corp. of Saskatchewan has withdrawn its €41 per share offer for potash and salt producer K+S. In reaction to the news, Shares in K+S plunged, while Potash shares rallied.

In light of challenging macroeconomic conditions that have contributed to a significant decline of global commodity and equity markets and a lack of engagement on the part of K+S management, Potash CEO Jochen Tilk said his company has concluded that continued pursuit of a combination is no longer in the best interests of its shareholders.

Since K+S first rejected the offer in July, US spot prices for potash have been falling.

From the outset and again in a statement released after the Potash exit, Kassel-based K+S said it rejected the takeover offer – despite its being a 60% premium on its average share price of the past year – because the bid did not reflect the fundamental value of the company’s existing businesses or the value contribution of its Legacy project in Canada.

The German company also reiterated that it believed the Canadian giant planned to close German potash mines, a scenario that also alarmed the government of the state of Hesse in which most of the mines are located. “A huge industrial-political loss has been avoided,” said Thorsten Schäfer-Gumbel, head of the state Social Democratic Party, commenting on the end to the potential deal.

The Canadians’ withdrawal “created clarity” for K+S, the world’s largest salt producer and Europe’s main potash supplier, K+S chief Norbert Steiner said, adding that management is “positive about the company’s long-term perspective.” In particular, he said, with the commissioning of the Legacy Project in summer 2016 and the implementation of its "Salt 2020"-strategy, it is expecting further tangible growth in the business units Potash and Salt in the medium-term.

Despite the current weakness of the potash markets, the German company still expects significant sales and earnings growth this year, Steiner remarked.

Reports said a successful takeover would have handed Potash Corp. control over about 30% of the global potash market as well as access to the K+S Legacy project in Saskatchewan at its doorstep.

The Canadian group had planned to incorporate K+S’s Legacy mine into Canpotex, its marketing conglomerate that handles potash sales outside of North America. K+S, however, wanted to market its own potash. In August it signed an exclusive supply deal with Koch Fertilizer for output from Legacy.

Analysts commenting on the initial takeover offer said they saw it as an expensive way for Potash to influence prices again. They pointed out that conglomerate has lost some of its clout due to the emergence of new competition and the 2013 breakup of the Russia-Belarus potash cartel, which along with Canpotex once controlled nearly 70% of the market.