Management and the supervisory board of German minerals producer K+S have voted to reject the unsolicited takeover offer for all company shares made by Potash Corporation of Saskatchewan.

K+S said the €41-per-share bid does not reflect the fundamental value of K+S and is not in the company’s best interests.

“Not only does this proposal undervalue our potash and magnesium products and our salt business, it completely disregards the value of our Legacy Project,” said CEO Norbert Steiner.

Alone the book value of the Legacy potash mine in Saskatchewan, scheduled to begin production in mid-2016, is €11 per share, and considering future earnings Steiner said K+S management calculates a value of up to €21 per share. “This is not yet reflected in the share price.”

The German company has already invested more than €2 billion in the project, which according to Steiner “is on time and on budget.” “The first tons of potash will be produced by the end of 2016 and positive cash flows will be generated already from 2017 onward,” he said.

“We believe PotashCorp is trying to take advantage of the valuation gap to take over K+S and gain control over Legacy,” Steiner added.

Moreover, the CEO said the two boards “have not been suitably convinced by PotashCorp that they have a sustained interest in continuing the fertilizer and salt businesses in their current form, which are strategically, technically and economically intertwined.”

Despite repeated requests to address this question, PotashCorp’s answers have remained vague. In Germany alone there are more than 30,000 direct and indirect jobs associated with the domestic raw material production and mining of mineral nutrients by K+S,” Steiner said.

Steiner also pointed to strategic initiatives across both the potash and magnesium and salt business units, which he said contribute to the positive outlook for the future.

The “Salt 2020” strategy alone, he said, is expected to produce a sustainable increase in operating profit of up to €250 million. Furthermore, the “Fit for the Future” efficiency program is expected to deliver cumulative cost savings of more than €500 million by the end of 2016.

Overall, K+S expects to see group EBITDA increase to €1.6 billion by 2020 with the Legacy Project contributing on average annual operating cash flow growth of more than 10%.

As an enticement to shareholders not to hand their papers over to PotashCorp, the CEO said “the boards continue to remain committed to its dividend policy of a pay out of between 40-50% of adjusted operating income after taxes, so that shareholders can look forward to an attractive dividend yield in the coming years.”