Bloomberg News

Israeli Finance Minister Opposes Israel Chemicals Sale

April 11, 2013

Israeli Finance Minister Yair Lapid

Israeli Finance Minister Yair Lapid said he will set up a panel to rethink the state’s rights in natural resources that are managed by private companies. Photographer: Uriel Sinai/AFP via Getty Images

Israeli Finance Minister Yair Lapid said he’d “adamantly oppose” the sale of fertilizer producer Israel Chemicals Ltd. (ICL) to Canada’s Potash Corp. of Saskatchewan Inc., threatening to block what would be the Middle East’s biggest takeover.

“This could be the final nail in the coffin for the deal,” Richard Gussow, an analyst at DS Securities & Investments in Tel Aviv, said yesterday by phone.

Lapid, 49, also put Israel Chemicals and other resource developers on notice that he would reconsider how they’re taxed. Shares in the Tel Aviv-based fertilizer producer, which mines minerals from the Dead Sea, fell the most in six months yesterday.

The acquisition of Israel’s second-largest publicly traded company would create the world’s biggest producer of potash, a nutrient that helps crops withstand drought and strengthens plant root systems. Potash Corp. had said it was seeking to gain majority control of Israel Chemicals, in which it held a 14 percent stake. Optimism that a deal would materialize helped boost Israel Chemicals’ stock 5.3 percent in the three months ending March 31.

Some lawmakers and unions had opposed the deal. Potash, based in Saskatoon, Saskatchewan, said in February it was putting its bid for Israel Chemicals on hold because of political events.

“Israel’s natural resources are a public asset and the Israeli public should be the first to benefit from them,” Lapid said yesterday in an e-mailed statement.

Shares Decline

Israel Chemicals dropped 3.7 percent to 44.32 shekels at 11:39 a.m. in Tel Aviv, the lowest since September. Yesterday, the share closed down 4.7 percent. Israel Corp., its parent company, dropped 1.4 percent to 2,449 shekels.

The Lapid announcement makes the deal “extremely unlikely,” said Gilad Alper, a senior analyst at Excellence Nessuah Brokerage Ltd.

Lapid, a political newcomer, had stated his opposition to such a deal while campaigning for office. His declaration, less than a month after he became finance minister, made his objections “extra official and extra emphatic,” Alper said.

“The real story, however, is that Lapid is considering setting up a public committee to discuss how the state is taxing natural resources,” Alper said. “This is triple worse.”

Lapid also said he would set up a panel to re-examine what he called “the state’s rights” in natural resources that are managed by private companies.

‘Good Idea’

Spokesman for Israel Corp. and Potash Corp. declined to comment on Lapid’s announcement.

Earlier yesterday, Israel Chemicals Chief Executive Officer Stefan Borgas said the company would benefit from a deal.

“Merging ICL with a big, strong global partner is a good idea,” Borgas said in a Bloomberg Television interview at the Tel Aviv Stock Exchange.

Before becoming finance minister in March, Lapid had criticized the transaction for its potential to harm Israel’s southern Negev region. Lapid is head of Israel’s second-biggest political party, Yesh Atid. Israel Chemicals employees have threatened to strike if talks with the new government over a deal are revived.

Potash Corp. closed unchanged at C$40.39 yesterday in Toronto trading. The shares have declined 0.2 percent this year.

To contact the reporters on this story: Alisa Odenheimer in Jerusalem at aodenheimer@bloomberg.net; David Wainer in Tel Aviv at dwainer3@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net


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