Potash Says ‘Political Events’ Put Its Israel Bid on Hold

Potash Corp. of Saskatchewan Inc., the world’s largest fertilizer producer, said “political events” have put its bid for Israel Chemicals Ltd. on hold.

“This thing has been put on hold to get through this time of political events that have happened in Israel,” Chief Financial Officer Wayne Brownlee said today in a presentation at a conference in Hollywood, Florida, organized by BMO Capital Markets. “We’ll see where we will get to over time.”

Potash Corp. is awaiting the outcome of talks about forming a coalition government in Israel following elections last month, said Brownlee. He said his Saskatoon, Saskatchewan-based company is seeking to control 51 percent to 100 percent of Israel Chemicals and won’t go hostile. Potash Corp. currently has a 14 percent stake, according to data compiled by Bloomberg.

Potash Corp. is facing resistance from Israeli politicians and labor groups over its plan to acquire control of the second-largest company by market value on the Tel Aviv Stock Exchange’s benchmark TA-25 Index. Opponents plan an “emergency conference” tomorrow to stop the sale, Meir Cohen, a member of Israel’s parliament, said today in an e-mailed statement.

“The opposition you’re seeing right now is really based on what I would call fear of the unknown,” Brownlee said. “We really have not spent any time yet talking with stakeholders in Israel.”

Shares Fall

Israel Chemicals fell 2.5 percent to 47.32 shekels at the close in Tel Aviv, the biggest drop since Dec. 31, giving the company a market value of 60.2 billion shekels ($16.1 billion). Controlling stakeholder Israel Corp. declined 2.2 percent while the TA-25 index fell 0.2 percent.

Potash Corp. rose 0.8 percent to C$39.96 at the close in Toronto. Its shares have declined 14 percent in the past 12 months.

Israel Chemicals, based in Tel Aviv, is controlled by the Ofer family’s Israel Corp., which owns 52 percent. The Israeli government can block takeover bids by using its so-called golden share, allowing the state to prevent a takeover to protect natural resources.

“We’re not interested in increasing the stake and still being a passive, minority shareholder,” Brownlee said. “In fact, that’s not a tenable position for us on a long-term basis.”

Low Cost

If Potash Corp. acquires Israel Chemicals, which harvests potash from the Dead Sea, the Canadian company would control about 25 percent of global production capacity, according to data compiled by Bloomberg. Potash is a form of potassium that helps crops withstand drought and strengthens plant root systems. Potash Corp.’s largest potash mines are in Saskatchewan.

“Clearly the rationale for us to embark on that transaction, if we can get there, is more regard to marketing and being the lowest-cost-delivered supplier to anywhere in the world, which is a pretty powerful statement if you can get there,” Brownlee said today.

Employees at Israel Chemicals, known as ICL, vowed to fight the proposed deal in December after Prime Minister Benjamin Netanyahu met in October with Potash Chief Executive Officer Bill Doyle.

Brownlee’s comments today look “like an exercise to try and anesthetize ICL workers, members of parliament and the public so that the sale can be completed in secrecy,” a task force of Israel Chemicals’ workers said in an e-mailed statement.

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