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Gains Slip for ICL, Israel Corp. After Conflicting Government Statements on Potash Corp. Deal
Published November 04, 2012Dow Jones Newswires
JERUSALEM – Shares of Israel Chemicals Ltd. (ICL.TV, ISCHY) and its parent, Israel Corp. Ltd. (ILCO.TV, IRLCY), opened lower Sunday after conflicting statements from the Israeli government on whether it would allow Canada's Potash Corp. of Saskatchewan Inc. (POT, POT.T), to increase its stake in ICL or merge with the Israeli potash maker.

When news broke last week that the government was talking to Potash about such a deal, shares of ICL and Israel Corp. gained about 5%. But over the weekend, the government first said it wouldn't approve a deal because it wouldn't be to Israel's advantage to have a foreign company controlling mining of potash from the Dead Sea; then late Saturday changed its tone when a finance ministry spokesman said it would be open to considering such a request.

At 0816 GMT Sunday, shares of ICL were trading down 1.24 shekels ($0.32), or 2.56%, at ILS48.50. Israel Corp. was trading down ILS80.00, or 3%, at ILS2,583.00, in a higher Tel Aviv market.

"(The government) is not closing the door completely," said Steven Shein, trader at Psagot Investment House in Tel Aviv. "So the shares haven't given all the gain back yet." Mr. Shein said that investors would favor such a deal because a tieup would likely have Potash paying a premium for ICL shares, as well as create synergy and industry advantages for both companies.

The government holds a golden share in ICL that allows it to overrule other shareholders in some circumstances. Analysts have said the government would face pressure from environmental groups as well as political pressure about allowing a foreign company more control over Dead Sea resources.

Potash currently holds a roughly 15% stake in ICL. If the two merged, it would create a giant in the potash Industry, which is currently plagued by low prices in Asia and other major export markets.

Potash and Israel Corp. representatives declined comment.

Write to Sara Toth Stub at [e-mail]

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