Politicians slam Potash Corp. bid for Israel Chemicals

Politicians from across the political spectrum met for an emergency Knesset meeting on Wednesday to oppose the interest of Canada’s Potash Corp. to purchase Israel Chemicals (ICL), one of the country’s largest companies.

Objections to the acquisition centered around concerns that, should the company be externally controlled, it would choose to downsize its Israel employees, move operations to the Jordanian side of the Dead Sea where labor is cheaper, and take Israeli environmental protection off its priorities list.

Potash, one of Israel’s largest chemical exports, is largely used for fertilizer.

The mere calls for a Knesset hearing threw cold water on the prospect.

On Tuesday, Potash Corp. CFO Wayne Brownlee said in Florida that “this thing has been put on hold to get through this period of time and to get through the political events that are happening in Israel,” but freely admitted that the company was interested in increasing its stake of the company from its current 14 percent to 51% or more, and ideally full ownership of the company.

Yesh Atid MK Meir Cohen welcomed the freeze, saying that the sale would be a “slap in the face” to the entire Negev, where the company employs some 5,000 workers, accounting for a fifth of the region’s output.

“Israel Chemicals isn’t a failing company,” he said. “We see no reason for its sale to a body that controls most potash in the world.”

Dimona Mayor Eli Bronstein agreed. “What will happen here is the destruction of the Negev,” he said. “The dream of Ben-Gurion and of the State of Israel will not be [if the sale goes through],” he warned.

Labor’s Micky Rosenthal noted that average Jordanian potash workers make a fraction of the earnings of their Israeli counterparts. Therefore, when it comes time to trim the fat, or seek efficiencies in the company, they would have no reason not to cut jobs in Israel, he said.

“We’ll have thousands unemployed in Israel,” Rosenthal predicted.

Rosenthal also accused the Finance Ministry of lying about whether any negotiations with Potash took place in the first place.

Israel Chemicals (ICL) denied any discussions with Potash Corp. over a possible sale. “To the extent that any dialogue exists regarding the merger between the companies, it has occurred between the Government of Israel and Potash Corporation,” a company spokesman said.

“Potash has not turned to ICL, and ICL is not engaged in any negotiations with Potash Corporation or any other company regarding this matter.”

Labor MK Avishai Braverman lamented the situation, saying it was a natural extension of the decision to privatize the potash supply. “It was a mistake to transfer it to private hands. These are Israel’s natural resources,” he said. “Natural resources belong to the citizens of Israel.”

Many of the politicians present in the discussions praised the multiparty support for blocking the sale, noting that parties with vastly different economic philosophies, slated to be both within the coalition and in the opposition, were present at the meeting.

“I’m typically a capitalist and support [Prime Minister Binyamin] Netanyahu’s policy,” said Ayelet Shaked of the Bayit Yehudi, adding that the newly-installed Knesset should gather 40 signatures to force the prime minister to explain how they would justify supporting such a move.

Likud Beytenu’s Robert Ilatov, the only representative from the Knesset’s leading party, said it was important to distinguish between smart and irresponsible ways of bringing foreign investors to Israel. That said, he opposed the potential acquisition.

Labor MK Nachman Shai said he could not recall a meeting where all the members so wholeheartedly agreed. “There’s a broad agreement in this house that we have to enact a change,” he said.

The hearing also drew representative from small companies in the employ of Israel Chemicals, worried that a foreign employer would sack them for unprofitability. “For 17 years we’ve had losses, and nobody dared send us home,” said Ben Shushan Avi from Magnesium, a plant that employs 450 workers. “If a foreign actor comes and makes American-style decisions, they’ll close us because we’re not profitable.”

In his Tuesday statements on the subject, Potash’s Brownlee dismissed the worries. “The opposition that you are seeing right now is what I would call ‘fear of the unknown.’ We really have not spent any time yet talking with the stakeholders in Israel,” he said.

“We feel like we have a very strong proposition for stakeholders, whether it be employees, people in the community, or governments looking for revenue,” he continued.

“It really isn’t about production cuts, or reduced employment, this really is a marketing story, it’s a distribution logistics story. We think that once we present these credentials we might be in a better position.”

If the government or the company are not pleased with the offer, they are free to reject it, he noted. “This is not, and would not, be a hostile attempt. This would be negotiated and would have to be in the interests of all stakeholders.”

But Israel Chemicals seems to have not yet ruled anything out. “In the event that any interested company turns to ICL, ICL management will act in the best interests of the company, including the employees of the company, many being residents of the Negev, the communities which host the company’s sites, the customers, and the company’s small and large shareholders,” the company said.