(Reuters) - BASF will sell its 1.07 billion euro ($1.48 billion) stake in potash miner K+S, severing ties with its former subsidiary in the wake of their fading business relations in nitrogen fertilizers.

BASF, the world's largest chemical company by sales, said on Thursday it plans to place up to 19.7 million shares of K+S, equivalent to the 10.3 percent it still holds in the group.

Earlier on Thursday, K+S shares closed at 54.24 euros, having gained almost 30 percent over the past six months.

Also on Thursday, K+S proposed a higher-than-expected dividend, banking on a marked profit increase this year as farmers' demand gets a boost from strong grain and crop prices.

"The timing does not seem to be bad just after K+S has delivered solid financial figures," said Roger Peeters, strategist and board member of brokerage Close Brothers Seydler.

BASF's net debt stood at 13.5 billion euros at the end of 2010, having edged up from just below 13 billion a year earlier after its 3.1 billion euro purchase of smaller peer Cognis COGNS.UL.

BASF had said earlier this month it was preparing to sell "major parts" of its nitrogen fertilizer business, which is under pressure from low-cost producers in the Middle East.

K+S is bound by an agreement that runs through 2014 to market nitrogen fertilizers produced by BASF.

After a loss at K+S's nitrogen unit in 2009, the business swung to a profit last year, but margins stayed far below those of its potash division.

Middle Eastern chemical companies such as Saudi Basic Industries Corp 2010.SE, or Sabic, are using their cheap access to natural gas, the feedstock needed for nitrogen, to make massive inroads into the fertilizer market.

"It is very unlikely that the business will stay in our hands beyond 2014," Chief Executive Norbert Steiner said on a call with analysts on Thursday.

A BASF spokeswoman told Reuters the company took advantage of "favorable market conditions," and that placement of K+S shares follows the sale of its nitrogen plants by coincidence.

BASF has repeatedly said it viewed its holding in its former unit K+S as purely financial, when asked how it would position itself if K+S were subject to a hostile takeover approach.

The potash industry last year saw its largest player Potash Corp escape BHP Billiton's hostile takeover approach, spurring speculation that K+S might also come into the cross-hairs of a larger rival at some point.

Agricultural group Cargill CARG.UL unveiled plans in January to spin off its $24 billion majority stake in Mosaic, potentially exposing the world's second-largest fertilizer producer to takeover approaches.