Ben Harrington in the Daily Telegraph reported:

German agricultural giant Kali and Salz, also known as K+S, is preparing a $2.4bn (£1.7bn) cash bid for Compass Minerals, a US-listed company that operates Britain's largest and oldest rock salt mine at Winsford.

Sources said K+S has hired Morgan Stanley to advise it on a possible offer for Compass Minerals.

Investment banks Dresdner Kleinwort and BNP Paribas have both committed to providing €500m (£446m) of financing to K+S for its bid.

Morgan Stanley has also been lined up to provide €500m of financing. The bank it is thought to be waiting to see how K+S's credit rating is affected before committing to financing the deal.

K+S has been studying a possible offer for Compass Minerals since November.

Sources following the situation said K+S's board is due to meet on March 15 to sign off on the financing package and decide whether to press ahead with the bid.

It is thought K+S is planning to pitch an initial offer at $78 a share. Market sources said if the approach is rejected, K+S could table a hostile offer as high as $88 a share.

Matthews reported on Bloomberg.com:

“Strategically, Compass would be a strong fit for K+S,” Sophie Joudier, a London-based analyst at Citigroup Inc. said in a note to clients. Compass gets 80 percent of sales from salt and 20 percent from potash, the reverse of how K+S generates its sales, said Jourdier, who rates the German company “buy.”

Compass shares jumped 7.3 percent in New York trading after the Daily Telegraph reported K+S was preparing a $2.4 billion cash bid for Compass. K+S was trading up 3.9 percent at 32.56 euros as of 10:32 a.m. local time. The stock has lost 55 percent in the past six months for a market value of 5.37 billion euros ($6.8 billion).