AP News

PotashCorp held talks about Israel Chemical

SASKATOON, Saskatchewan (AP) — Potash Corporation of Saskatchewan Inc. said Wednesday it has held talks with Israeli government officials about potential options to increase its ownership stake in Israel Chemical Ltd.

Potash Corp., which controls more than 25 percent of the world's supply of potash, said in a statement that no deal has been formulated and there is no assurance that a deal will be reached.

Israel Corp. filed a disclosure document on the Tel Aviv Stock Exchange saying that it is aware Potash has held talks with various government officials, including Israel's prime minister about the possibility of "integration" with ICL.

Potash is a fertilizer ingredient critical to the global food supply. Israel Chemicals is one of the largest producers.

The Canadian company sought to increase its stake in ICL earlier this year from about 14 percent to 25 percent, but dropped its attempt in the summer after delays in the government review process.

PotashCorp chief executive Bill Doyle said in June that the company decided to withdraw its offer both because the deal was taking a "very long time" and because ICL's terms weren't clearly defined, adding that PotashCorp would reappraise its options.

Although PotashCorp holds a 14 percent stake, it does not have any seats on the ICL board. Israel Corp. owns roughly a 52.3 percent interest.

Shares in ICL, which were briefly halted in trading on the Tel Aviv Stock Exchange, were up about five percent, to give the company a stock market value of about US$15.1 billion.

CIBC analyst Jacob Bout said ICL's operations are relatively low cost, but the "last thing PotashCorp needs is more potash capacity" as it already has far more capacity than it is selling.

"This would be a large swallow with ICL market value of $15 billion," Bout wrote in a note to clients.

Desjardins analyst John Hughes said ICL could give PotashCorp a position in the European market but said a takeover deal would face significant regulatory hurdles including anti-trust concerns.

Last week, PotashCorp reported a drop in third-quarter profits due in part to delays in reaching contracts with customers in China and India. The company also cut its earnings guidance for 2012 by about 14 percent.

Doyle said the company was prepared to wait for China and India to make deals in light of their need for fertilizer to grow food production and predicted that demand and sales would rebound significantly in 2013.

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