ICL Gains Most in 3 Months on Bets Drop Overdone: Tel Aviv Mover

Israel Chemicals Ltd. (ICL) surged the most in three months on bets declines this month, triggered by the Finance Minister’s opposition to a merger with Potash Corp. of Saskatchewan Inc. (POT), were overdone.

The shares of the company that extracts minerals from the Dead Sea to make fertilizers jumped 2.6 percent, poised for the the largest increase since Jan. 23, at 1:17 p.m. in Tel Aviv. The stock was the biggest gainer on Israel’s TA-25 Index, which rose 0.7 percent.

ICL shares reached a nine-month low last week after Finance Minister Yair Lapid said he “adamantly opposed” Potash’s potential bid for the chemicals maker. ICL’s price-to-earnings ratio was 13.5, compared with the 16.4 average of 15 agricultural chemicals makers, according to data compiled by Bloomberg.

“The reaction to the likely end of the ICL-Potash talks was by far overdone,” said Richard Gussow, an analyst at DS Securities & Investments Ltd. in Tel Aviv, who has a market perform rating on the stock. “The shares are now making a comeback to a fair valuation, with or without a deal.”

Optimism that a deal would materialize helped boost Israel Chemical’s stock 5.3 percent in the three months ending March 31. Lapid plans to set up a panel to rethink the state’s rights in natural resources managed by private companies. The resources are a “public asset”, he said April 10.

Low Odds

The proposed acquisition of ICL, Israel’s second-largest publicly traded company by market value, would create the world’s biggest producer of potash, a nutrient that helps crops withstand drought and strengthens plant root systems. It would also be the biggest Middle Eastern takeover, according to data compiled by Bloomberg.

ICL employees have protested against the deal. ICL Chief Executive Officer Stefan Borgas has said the company would benefit from the deal. Lapid, head of Israel’s second-biggest political party, Yesh Atid, had criticized the transaction for its potential to harm Israel’s southern Negev region before becoming finance minister in March. “The odds of a deal going through were fairly low from the beginning,” Gussow said.

Shares of Israel Corp., which holds 52.3% of ICL shares, gained 1.5 percent to 2,364 shekels.

To contact the reporter on this story: David Wainer in Tel Aviv at dwainer3@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net

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