PotashCorp considering concessions in bid for Israel Chemicals

14 March 2013 22:30  [Source: ICIS news]

HOUSTON (ICIS)--Taking a more calculated approach to a proposed acquisition of Israel Chemicals, officials with PotashCorp are reportedly considering an array of concessions that would make their takeover bid more favourable and lessen widespread opposition within Israel.

In attempt to spruce up the deal and win eventual approval, PotashCorp is apparently willing to offer job guarantees, environmental safeguards and commitments to maintain unspecified production capacity. Additionally, the company is reportedly thinking about recalculating the initial bid in such a fashion that they could offer a cash-based plan that would generate additional tax revenue for Israel.  

Despite their determination to increase the company’s share of the global potash market, company officials in February said the bid for the Tel Aviv-headquartered chemical producer was on hold. Potash Corp wants to increase its stake from 14% to a larger share, if not a complete ownership, but has repeatedly stated the Canadian producer would not take a hostile takeover approach.

The fertilizer giant knows all about hostile takeover attempts, having emerged from such an attempt three years ago when BHP Billiton tried to grab the reigns but was eventually halted by Canadian government regulators.

Chief financial officer Wayne Brownlee said last month that the company was not interested in being a minority shareholder of the producer, which acquires its potash from exclusive Dead Sea harvesting. He instead pointed to the fact that, for the long-term outlook of his company, the increased position was primarily about sourcing a key area of distribution.

Politicians and labour groups opposed to the takeover have been firm in their stance, saying the move would allow foreign interests to seize control of a vital national asset. It has also been feared in Israel that PotashCorp would reduce employment or move operations into another country if it was successful in acquiring Israel Chemicals.

The one ace that is still remaining in the hands of the opposing coalition is that the government can block takeover attempts by using its "golden share", which is a nominal share able to outvote all other shares under certain circumstances.

Analysts have estimated if PotashCorp were to acquire Israel Chemicals, it could conceivably control 25% of global potash production as well as unleash expanded markets within Europe and Asia.

By: Mark Milam
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