K+S Acquires Morton Salt From Dow for $1.675 Billion

April 2 (Bloomberg) -- K+S AG, Europe’s biggest salt maker, agreed to buy Morton Salt from Dow Chemical Co. for $1.675 billion to become the world’s biggest producer.

Morton Salt, the largest maker in North America, had sales last year of $1.2 billion and $270 million of earnings before tax and other items, Kassel, Germany-based K+S said today in a statement on its Web site. The all-cash transaction is expected to close midyear, said Bob Plishka, a spokesman for Midland, Michigan-based Dow.

K+S Chief Executive Officer Norbert Steiner is expanding in North America to gain markets for rock salt and other de-icing materials. The agreement marks the start of Dow’s effort to sell about $4 billion in assets to pay back a $9.5 billion short-term loan used yesterday to acquire Rohm & Haas Co., a chemical maker and the owner of Morton salt.

“Morton Salt is an excellent opportunity to grow our salt business,” Steiner said in the statement. “Our business operations are highly complementary.”

Morton Salt, whose consumer products are known by the “The Morton Umbrella Girl” logo, will boost earnings per share starting next year, K+S said. The company plans to save money by having operations in North America, Chile and Brazil.

“This sale puts us ahead of schedule on our de-leveraging plan post the close of the Rohm & Haas acquisition,” Dow Chief Executive Officer Andrew Liveris said in a separate statement. “It is the first of many steps designed to deliver on our clear and measurable plan to build value for our shareholders.”

Founded in 1848

Morton, founded in 1848, is based in Chicago and employs 2,900 people. It operates salt mines, solar evaporation facilities and vacuum pan operations capable of producing 13.1 million metric tons of salt a year, K+S said.

Dow and K+S don’t foresee any antitrust issues arising from the acquisition agreement, K+S said.

Standard & Poor’s Ratings Services yesterday cut Dow’s debt rating to BBB-, the lowest investment grade, from BBB. Dow’s ratings may be affirmed if earnings for the remainder of the year improve and the company “discloses further progress against its objectives to support credit quality, including asset sales,” S&P said.

Dow rose 4.5 percent to $8.81 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have dropped 42 percent this year. K+S stock fell 0.4 percent to 34.80 euros in German trading yesterday.

BLOOMBERG