By Sarah Sloat

FRANKFURT--German salt and fertilizer company K+S AG on Thursday rejected a takeover approach worth EUR7.85 billion ($8.75 billion) by rival Potash Corp. of Saskatchewan.

K+S said the proposal undervalued its products and projects, adding that Potash hasn't demonstrated a firm commitment to its employees' interests.

"The proposed transaction does not reflect the fundamental value of K+S and is not in the best interest of the company," K+S said in a statement.

K+S was widely expected to rebuff the bid from Potash, whose offer equated to EUR41 a share.

A spokesman for Potash declined to comment.

Both companies mine potash, a fertilizer, and a tie-up would create a company that could control up to 30% of the global market.

K+S said its Saskatchewan mine, being developed in a project known as Legacy, will make it the only potash producer with its own large production facilities on two continents.

The company claimed the book value of the Legacy project alone "represents EUR11 per share; considering future earnings we calculate a value of up to EUR21 per share." It added that this is not yet reflected in the share price.

"We believe Potash Corp. is trying to take advantage of the valuation gap to take over K+S and gain control over Legacy," said K+S Chief Executive Norbert Steiner, who emphasized his company's desire to remain independent.

K+S also suggested Potash has been "vague" in its commitment to protect employees, and has not demonstrated "a sustained interest in continuing the fertilizer and salt businesses in their current form, which are strategically, technically and economically intertwined."

Since the proposal was made last week, analysts have said they consider a price of between EUR45 and EUR55 per share to be reasonable. At the upper end, Commerzbank AG analysts said there would be upside to EUR55 per share in a takeover scenario, in view of the Legacy project and enhanced pricing power and potential synergies that would benefit Potash.

In a conference call, K+S Chief Financial Officer Burkhard Lohr declined to specify what might be an adequate offer. Potash's proposal was informal, he said, and any official bid would be put to shareholders, who would decide what price is fair.

Write to Sarah Sloat at sarah.sloat@wsj.com

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