Potash Corp wants to buy ICL despite obstacles
Canadian fertilizer producer Potash Corp of Saskatchewan says it is determined to buy most, if not all, of ICL Israel Chemicals Ltd and that stiff local opposition to such a takeover is based on unfounded fears.
Potash, the world's largest producer by capacity of its namesake crop nutrient, is aiming to boost its 14 percent stake in ICL Israel Chemicals, the world's sixth-largest potash producer, to at least 51 percent and preferably 100 percent.
"The opposition you're seeing now is fear of the unknown," Potash Corp Chief Financial Officer Wayne Brownlee said on Tuesday in remarks at BMO Capital Markets Global Metals and Mining conference in Hollywood, Florida, that were distributed via webcast.
The largest shareholder in ICL is the conglomerate Israel Corp Ltd, which owns more than 52 percent, according to Thomson Reuters data. The Israeli government holds a golden share in ICL Israel Chemicals, giving it the authority to decide on any takeover move on the company.
A spokesman for Israel Corp said there are no talks between the companies currently because Potash Corp must first secure approval from the government. Prime Minister Benjamin Netanyahu is trying to assemble a coalition government after January's general election.
Brownlee said Saskatoon, Saskatchewan-based Potash Corp has not been talking with stakeholders in ICL recently because of the election.
Workers at Israel Chemicals have said they would hold protests in coming weeks to try to prevent a deal, which they fear will lead to layoffs.
Addressing those concerns on Tuesday, Brownlee said Potash Corp is not interested in cutting production or employment levels at ICL. He said its rationale is to become the "lowest cost provider" of potash "to anywhere in the world".
Potash Corp does not want just to increase its stake in ICL and remain a passive investor, Brownlee said.
Buying ICL, which has a market cap of nearly $17 billion, would represent the largest foreign takeover of an Israeli company.
Shares of Potash Corp were up slightly in morning trading in New York and Toronto. ICL shares dropped 2.5 percent in Tel Aviv.
Focus on Volume
Brownlee also said that Potash Corp's focus in general for the next five years will be on building up potash sales volume.
"Right now the message is we're really seeking volume growth as opposed to seeing price growth," Brownlee said. "That's our key objective at this stage."
Canpotex Ltd, the offshore selling agency for Western Canadian potash producers Potash Corp, Mosaic Co and Agrium Inc, has long used its bargaining clout to drive the highest price, and Potash Corp regularly idles its mines in times of high supply or lower demand.
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