German fertilizer and salt supplier K+S AG (SDF.XE) may not win its bid for Morton Salt now that the number of admirers has grown, but analysts say that wouldn't necessarily be a bad thing.

Like its competitors, K+S is flush with cash after a year of record high fertilizer prices and is looking for bargains among depressed sector stock prices. Chief Executive Norbert Steiner has said repeatedly he is scouting out salt and fertilizer businesses for acquisitions.

But in recent weeks, K+S has reportedly taken at least one potential bid off the table while others remain just speculation.

A bid for U.S.-based Compass Minerals International Inc. (CMP) reportedly was shelved after its stock price soared on speculation that K+S was preparing a $2.4 billion cash bid. While it had publicly expressed interest in Compass, K+S declined to confirm whether it had planned to make a formal bid.

There also has been market speculation about K+S making a play for the fertilizer division of Dutch chemicals company Koninklijke DSM NV (DSM.AE), but so far it seems only to be talk.

"There has been a lot of speculation about our company's potential interest in various acquisition targets in North America or the Netherlands," Steiner said earlier this month. "I would like to reiterate that the company as a rule doesn't comment on market rumors."

WestLB analyst Wolfgang Fickus said K+S is being prudent in not paying excess multiples for something just because it can.

"They don't need to make acquisitions," Fickus said regarding K+S. "The company can survive nicely as they are."

Fickus notes the price for Morton Salt is likely to rise now that six companies are bidding on the Rohm & Haas Co. (ROH) unit. While it has been put on the auction block for $1.5 billion, Fickus believes the competition could drive bidding upward of $2.4 billion - a premium considering the unit's 2008 sales totaled $1.2 billion. One trader noted the German group's share price fell Monday after it was revealed that K+S faces stiffer competition for Morton, amid worries it might overpay for the target. K+S shares had previously fallen sharply on reports of its $2.4 billion bid for Compass, and later recovered after sources said the bid was shelved. "That's particularly bad for this share, because it's regarded mainly as a dividend stock," the trader said.

Analyst Ben Johnson of Morningstar Research said rumors of takeovers and mergers in the fertilizer industry have been rampant in recent weeks, as many have cash to spend. Talk was fuelled also by a hostile bid by CF Industries Holdings Inc. (CF) for Terra Industries Inc. (TRA), which was followed by Agrium Inc.'s (AGU) hostile bid for CF.

Johnson noted K+S is considered a small to medium-sized player in the potash production market, dwarfed by Canada's Potash Corp. of Saskatchewan Inc. (POT) and Mosaic Co. (MOS).

"In terms of organic growth, K+S' options are somewhat limited given where its assets are," said Johnson. But he added that K+S doesn't suffer from a "grow or die" scenario.

And with fertilizer prices falling rapidly in 2009, particularly for potash and nitrogen, Johnson doesn't see any "mega deals" on the horizon. WestLB's Fickus, who has a "reduce" rating on K+S stock with a EUR29.70 target price, said DSM's nitrate business would fit well with K+S' current product line, but only "if it came at the right price."

-By Allison Connolly, Dow Jones Newswires; +49 69 29725513; allison.connolly@dowjones.com