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The head of K+S AG (SDF.XE) on Monday dismissed speculation that its $1.68 billion purchase of Morton Salt was a defensive move to ward off an acquisition threat from Potash Corp. (POT).

The purchase elevated the German mining group into the world's largest salt producer by volume and provided a counterweight against the collapse in demand for potash and related fertilizer, its other core business.

Norbert Steiner, chief executive, said in an interview that buying Chicago-based Morton was not a defensive move, despite the persistent speculation linking the company with a bid from Potash, its larger Canadian rival.

Morton Salt was divested by Dow Chemical Co. (DOW) to finance its own purchase of chemicals group Rohm & Haas after alternative funding fell through.

Steiner said Morton Salt provided stable cash flow until the potash market "normalized" after a boom-and-bust over the past 18 months, something he didn't expect before 2011.

"[Salt] was able to step into the breach," said Steiner of its existing unit's performance as potash demand and prices slid in the first half of 2009 following last year's commodity boom.

The buy doubled its revenue from salt and expands its North American footprint into the Midwest and Canada, alongside existing operations in Europe, South America and Asia.

K+S executives said salt demand had remained stable through the economic downturn. Its consumer segment had not suffered cannibalization by private-label brands while the latest contract renewals from U.S. state and municipal governments for use in de-icing had been ahead of budget.

"We've not seen a recession," said Steiner of the salt business.

He predicted that Morton Salt would have a "record" 2009, with earnings before interest, taxes, depreciation and amortization around the level seen last year. K+S expects the deal to be accretive to earnings from 2010.

- By Doug Cameron, Dow Jones Newswires; 312-750-4135; doug.cameron@dowjones.com