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Fischer Sees No Economic Reason to Block ICL Sale to Potash

Nov. 14 (Bloomberg) -- Bank of Israel Governor Stanley Fischer said he sees no major economic reason that might lead the government to block the sale of Israel Chemicals Ltd. to Potash Corp. of Saskatchewan Inc.

“In terms of economic activity, if they continue producing here, there is no major reason not to sell,” Fischer said today in an interview at his Jerusalem office. “Profits would be moved abroad instead of kept in the Israeli economy, but the main thing we would be interested in is loss of jobs and that wouldn’t necessarily happen.”

Prime Minister Benjamin Netanyahu met on Oct. 31 with Potash Corp. Chief Executive Officer Bill Doyle about a possible sale and a few days later, Israel asked the company to clarify the proposed acquisition. The government can block takeover bids of the country’s second-largest company by market value by using its so-called golden share.

Saskatoon, Saskatchewan-based Potash Corp. has a 14 percent stake in Tel Aviv-based Israel Chemicals, which harvests minerals from the Dead Sea and is controlled by Israel Corp. The remaining 86 percent has a market value of about 50.2 billion shekels ($12.8 billion), based on yesterday’s closing share price.

Shares of Israel Chemicals, which opened down 1.2 percent, added 0.7 percent to 46.16 shekels at 3:59 p.m. in Tel Aviv.

‘Carries Weight’

“As governor of the Bank of Israel, Fischer’s voice carries weight,” said Richard Gussow, a senior analyst at Tel Aviv-based DS Securities & Investments Ltd. “He is talking from an economic point of view and there is some logic to the deal.”

Israel’s Finance Ministry said earlier this month that the government “won’t allow any deal that endangers or impairs the economic and environmental interests of the State of Israel and its citizens.”

The ministry is concerned about loss of revenue from the proposed merger should Potash Corp. decide to divert profits out of Israel due to high taxes and royalties, TheMarker, a Tel Aviv-based newspaper, reported on Nov. 7, without citing anyone. Finance Minister Yuval Steinitz said this month that Israel’s natural resources belong to its citizens.

Gussow said that even with Fischer’s remarks, “the objection is going to come because the Dead Sea is one of the country’s few natural resources and it also sits on the border with Jordan, which is seeing some instability.”

Approval Awaited

Clal Finance Batucha Brokerage Ltd. said in a trader’s note that while Fischer’s comments are a positive for a potential deal, “real moves will wait for committees, regulatory approval, pricing and then shareholder approval, in that order.”

Officials are expected to meet Potash Corp. representatives later this month, a Finance Ministry official said last week, speaking anonymously because of the matter’s sensitivity. The company last year agreed to pay increased royalties on potash production and finance most of the costs to clean up salt residue, a byproduct of potash production at the Dead Sea.

“What we don’t want is to sort of move all economic activity abroad. We want economic activity to be kept here,” Fischer said. “I don’t think there will be an issue. The resources they are after is the potash itself. They have to get it out of the Dead Sea.”

Potash Corp. dropped 2.7 percent yesterday to close at C$37.98 in Toronto.

To contact the reporters on this story: Gwen Ackerman in Jerusalem at; Alisa Odenheimer in Jerusalem at

To contact the editor responsible for this story: Andrew J. Barden at

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