Israel Chemicals employees declare work dispute over proposed merger with Potash Corp amid fear that new ownership would hurt employee conditions, creating hurdle that could disrupt progress of the talks
Andrew Rogers
NEW YORK
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December 20, 2012
(Bloomberg LP)
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Israel Chemicals Ltd. dropped to the lowest in a month as employees declared action over a proposed merger with Potash Corp. of Saskatchewan Inc., creating a hurdle for what would be the Middle East’s biggest acquisition.
Shares dropped 2 percent to 46 shekels, the lowest since Nov. 22, after the Histadrut labor union said employees of two units of Israel Chemicals have joined Dead Sea Works Ltd. staff in declaring a work dispute over the merger talks. “The concern is that the new owners would act to damage and worsen the conditions of the employees of ICL in order to improve profits,” the labor union said in an e-mailed statement yesterday at the close of the stock market.
Prime Minister Benjamin Netanyahu met on Oct. 31 with Potash Corp. Chief Executive Officer Bill Doyle about a possible sale and a few days later Israel asked Potash to clarify the proposed acquisition. The government can block takeover bids of the country’s second-largest company by market value by using its so-called golden share, allowing the state to prevent a takeover to protect natural resources.
“This is a potential wrench in the works of the Potash merger talks”, Zach Herzog, Head of International Sales at Psagot Investment House Ltd. “The market views the potential merger favorably since it is reasonable to assume that Israel Chemicals shareholders would receive a premium on their holdings.”
Protect Interests
The labor group said it is seeking a meeting with Netanyahu and Finance Minister Yuval Steinitz to prevent the acquisition by the Canadian company.
“Potash has made an initial request which we are studying,” Steinitz said today in an interview with Bloomberg on the sidelines of a visit to an research and development center in Tel Aviv. “We don’t rule out anything, but on the other hand we will protect as needed the interests of the state and the economy and employment.”
Potash Corp. has a 13.84 percent stake in Tel Aviv-based Israel Chemicals, according to data compiled by Bloomberg. The company, which harvests potash from the Dead Sea, is controlled by the Ofer family’s Israel Corp. If Potash Corp. successfully acquires Israel Chemicals it would become the largest producer of its namesake crop nutrient with control of about 25 percent of global production capacity, according to data compiled by Bloomberg.
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--Editors: Robert Lakin, Peter Branton
To contact the reporter on this story: Shoshanna Solomon in Tel Aviv at ssolomon22@bloomberg.net
To contact the editor responsible for this story: Alaa Shahine at asalha@bloomberg.net
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