(Repeats to include link to Potash Corp CEO's letter)
* Potash Corp had offered 41 euros per share in cash
* K+S had refused to negotiate, deeming bid too low
* K+S was sceptical of Potash Corp's assurances on jobs
* K+S shares drop 24 percent (Adds K+S shares, analyst comment)
By Greg Roumeliotis and Arno Schuetze
NEW YORK/FRANKFURT, Oct 5 (Reuters) - Potash Corp of Saskatchewan said on Monday it had withdrawn its 7.9 billion euro ($8.9 bln) offer for German potash producer K+S , citing a decline in global commodity and equity markets and a lack of engagement by K+S management.
K+S shares dropped 24 percent after Potash announced its decision in a statement, wiping almost 1.5 billion euros off the company's market value.
An acquisition of K+S would have given Potash Corp an opportunity to realize savings from selling potash within North America from its own Western Canada mines and from K+S's Legacy mine, which is under construction in the region.
However, senior K+S executives dismissed the Canadian company's 41-euro-per-share cash bid -- which represented a 59 percent premium to the volume-weighted average of K+S's share price during the prior 12 months -- as too low and refused to negotiate.
Since Potash Corp made its offer to K+S privately at the end of May, shares of K+S peers have dropped by around 40 percent amid concerns over weakening demand from China, the world's largest consumer of potash.
"We withdrew our proposal, frankly, with some disappointment as the strategic rationale for the transaction was compelling in our view," Potash Corp's Chief Executive Jochen Tilk said in a letter to K+S's supervisory board dated Oct. 4, which was obtained by Reuters.
"Nonetheless, in light of the market conditions ... and a lack of engagement by K+S management, we have concluded that the pursuit of a business combination with K+S is no longer in the best interest of Potash Corp's shareholders," he said.
K+S said it would comment on Potash Corp's decision later on Monday. (For Potash Corp CEO's letter please click on: http://www.pdf.investintech.com/preview/7d7a8e92-6b30-11e5-9555-002590d31986/index.html)
K+S had voiced fears that Potash Corp could dismantle the company and eliminate jobs, and that its pledges to the contrary were too vague. Potash Corp argued that its proposal was not based on closing mines, curtailing production, selling K+S's salt business or cutting jobs.
"This will increase pressure on K+S management to come up with measures to improve the value of K+S in this challenging commodity environment," Baader Bank analyst Markus Mayer said.
Equinet analyst Michael Schaefer, who recommends that investors buy K+S shares, said the German company's upcoming investor day on Nov. 12 could be a good opportunity for management to try to persuade investors of its value.
Potash Corp meanwhile plans to focus on its growth strategy, according to people familiar with matter who asked not to be identified as the matter remained confidential.
(Additional reporting by Rama Venkat Raman in Bangalore, Maria Sheahan and Patricia Weiss in Frankfurt; Editing by Miral Fahmy and Susan Fenton)