Canada's Potash group won't buy Israel Chemicals

Yair Lapid’s reluctance to sell, lack of clarity, cause Saskatchewan-based company to back off takeover

One of the world’s largest potash manufacturers won’t buy Israel Chemicals, Canada’s Potash Corporation of Saskatchewan said in a statement Thursday, following weeks of pressure within Israel to cancel the deal.

While the sale would “be of tremendous benefit to stakeholders of both companies and the state of Israel, there must be receptivity to foreign investment and certainty in the rules that govern such investment,” the statement read.

“Now is not the time to pursue this opportunity and [we] will focus our energies on other options to maximise shareholder value,” Potash concluded.

Israel Chemicals, owned by Israel Corp, which is controlled by Idan Ofer, said it would pursue other possible ways of investment and business development.

The Israeli group said it was “a strong company” with a bright and attractive future in many fields.

Earlier in the month, Finance Minister Yair Lapid spoke out against the proposed merger between Potash and ICL, saying Israelis should benefit from the country’s natural resources.

Employees of ICL have vehemently opposed the deal, which would increase PotashCorp’s grip on the potash industry. The potassium-based product, which ICL produces at its Dead Sea plant, is primarily used in fertilizers.

“Israel’s natural resources are public property, and the Israeli public should be the first to benefit from them,” Lapid said.

He also called for the creation of a committee to reexamine Israel’s rights to natural resources that are managed by private companies.

In late February, before he was named finance minister, Lapid called the sale of ICL to PotashCorp an “un-Zionist act.”

The Canadian company was seeking to increase its current 13.8% share of ICL to somewhere between 51% and 100%. The deal would have required approval by the Israeli government, which holds a “golden share” in the Israel Corporation, ICL’s parent company. Such a share allows special voting rights in a company, including veto power on mergers.

Talks came to a standstill as Prime Minister Benjamin Netanyahu struggled to form a new government following January’s elections. But in recent weeks, PotashCorp has been renewing its lobbying effort with top government officials, including the prime minister, a known proponent of privatization.

Arno Rosenfeld contributed to this report.