Israel Chemicals Drops in Tel Aviv on Cut Price Stake Sale

Israel Chemicals Ltd., the fertilizer maker that listed shares in the U.S. last week, headed for the biggest decline in a year after Israel Corp. sold part of its stake at below market value.

Israel Chemicals declined 4.4 percent to 26.56 shekels ($7.22) at the close in Tel Aviv, the steepest retreat since October 2013. Israel Corp. slid 3.7 percent to 2,075 shekels, after the holding company sold more than 60 million shares of its subsidiary at a price of $7 in a secondary offering as ICL listed on the New York Stock Exchange. That’s a 7 percent discount to the closing price in Tel Aviv on Sept. 23.

“The discount at which Israel Corp. sold Israel Chemicals shares surprised the market,” Gilad Alper, a senior analyst at Excellence Nessuah Brokerage in Petach Tikva, Israel, said by phone today. “Israel’s regulatory environment and the spectre of added taxes puts Israel Chemicals in an inferior position to peers, and foreign investors were not willing to pay more than $7 for the company.”

Israel Chemicals, the country’s second-largest publicly traded company, faces the threat of higher fees after a government panel recommended raising the public share of mining profits to at least double its current payment. The company said it sought a U.S. listing of shares as part of a push to broaden its investor base.

Israel Corp. has also given the underwriters on its sale a 30-day option to buy as much as 6 million additional shares in Israel Chemicals.

ICL’s Tel Aviv shares trade at 10 times 12-month estimated earnings, compared with an average of 13 times among industry peers, according to data compiled by Bloomberg. Its New York shares closed at $7.20 on Sept. 26 after two days of trading. Before the listing, Israel Chemicals traded in the over-the-counter market in the U.S.

Michel Udi, a spokesman for Israel Corp., declined to comment when contacted by phone today.

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