Israel’s new Finance Minister, Yair Lapid, has told senior staff that he is strongly opposed to Potash Corp. of Saskatchewan Inc.’s takeover of Israel Chemicals Ltd. (ICL). He said that Israel’s natural resources are public assets, and that the Israeli public should be the first to benefit from them.
Lapid also announced plans to establish a public committee to re-examine the state’s rights in natural resources managed by private companies. This has already been done in the gas and oil sector, where a new law passed two years ago substantially raised the government take. The timetable for establishing the committee is uncertain, but it could have a substantial impact on ICL.
It is unclear whether Prime Minister Benjamin Netanyahu was informed in advance of Lapid’s announcement. Netanyahu met in October with PotashCorp President and CEO William Doyle to discuss the planned acquisition. Due to the controversial nature of the deal, Netanyahu put off dealing with the matter until after the Israeli elections in January and the establishment of a new government.
Netanyahu did not publicly come out against the deal, and some reports said that he would support it under certain circumstances. However, the mounting public opposition may leave him with no choice but to go along.
Lapid’s announcement was praised by Knesset members from various political parties, as well as by the ICL union and leading environmental groups, all of whom have been campaigning against the deal.
Professor Eitan Sheshinski, who headed the government committee on the gas and oil sector, welcomed the decision by Lapid, noting that the government has long ignored the issue of its right on natural resources. In a radio interview, Sheshinski said that the time has come to implement a uniform policy on all natural resources. He noted that the payments by ICL were determined at a time when potash was selling for $80/mt.
Lapid was said to be angry over news reports in recent days that Idan Ofer was planning to relocate to London. The rationale was to pay lower taxes in general, and specifically on any future takeover of ICL by PotashCorp. Ofer controls a majority stake in ICL through his Israel Corp. holding company. Lapid was quoted in the Yediot Ahronot newspaper as saying that “you can’t get rich at the expense of the Israeli public and pay taxes elsewhere.”
Senior Israel Corp. and ICL officials mounted a lobbying campaign in recent weeks to get the proposed deal approved. Approval from the Israeli government − specifically the Finance Ministry − is necessary as the state has a veto by virtue of a “golden share” it holds in ICL as part of the company’s privatization process in the 1990s. Israel Corp. CEO and ICL Chairman Nir Gilad said that the proposed deal would be good for the Israeli economy and would bring one of the biggest players in the fertilizer industry to Israel.
Last month, PotashCorp hinted that it would sweeten its offer for ICL. One report in the local media said the Canadian company was prepared to pay more than $20 million for control of ICL. The offer was due to be presented this month, and reportedly would contain commitments to retain production levels, refrain from layoffs, list its share on the Tel Aviv Stock Exchange, and commit to strict environmental guidelines. PotashCorp would not confirm the reports, saying it does not respond to news stories.
PotashCorp currently holds a 13.9 percent minority stake in ICL, and has said it is not interested in retaining a minority stake on a long-term basis.
Just hours before Lapid made his announcement, ICL CEO Stefan Borgas said the company would be stronger after a deal with PotashCorp. He added, however, that there were no talks at the moment between the two companies on the matter.
Earli