Potash eyes ICL takeover as a road to China, India

Wed Oct 31, 2012 5:22pm EDT
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By Steven Scheer and Rod Nickel

JERUSALEM/WINNIPEG, Manitoba (Reuters) - Potash Corp (POT.TO: Quote), the world's No. 1 fertilizer producer, is ramping up efforts to buy Israel Chemicals Ltd so it can shore up its leverage with China and India, top consuming countries that are expected to drive much of the industry's growth.

Although a deal is likely a long way off, acquiring ICL (ICL.TA: Quote), the world's sixth-largest fertilizer producer, would give Canada's Potash Corp better shipping access to China, India and other Asian economies. Rising Asian incomes and populations are expected to trigger greater fertilizer use to produce more food.

Potash Corp confirmed on Wednesday it has been in talks with Israeli officials on acquiring ICL. To get a deal done it would need approvals from Israel's Government Companies Authority, the prime minister and the Antitrust Authority to increase its 13.84 percent stake in ICL. If it does win approval in Israel, it would still likely need further antitrust approvals from a range of global regulators.

"This deal cannot be ruled out. However it is unlikely to happen in the near term," said Virginie Boucher-Ferte, an analyst at Deutsche Bank, in a note to clients.

About 34 percent of ICL, which has a market value of about $15 billion, is traded on the Tel Aviv Stock Exchange and a deal would be the largest foreign takeover of an Israeli company.

Potash Corp, which kept its Canadian status in 2010 after Ottawa vetoed a $39 billion bid from Anglo-Australian miner BHP Billiton Ltd (BHP.AX: Quote), has a market value of around $35 billion.

Conglomerate Israel Corp (ILCO.TA: Quote), which owns a majority in ICL, said Potash Corp Chief Executive Bill Doyle has met Israeli Prime Minister Benjamin Netanyahu to push for a deal, while financial daily Calcalist said Netanyahu has instructed his staff and the finance ministry to examine it.

"The company confirms it is aware that Canada's Potash is in talks with various government agencies that included a meeting with the prime minister regarding examining the possibility of merging ICL with Potash," Israel Corp said in a statement.   Continued...