The possible sale of agrochemicals manufacturer Makhteshim Agan Industries Ltd. (TASE: MAIN) to China National Chemical Corporation (ChemChina) today reached Knesset Finance Committee. The committee is discussing the matter after controlling shareholder Nochi Dankner suspended negotiations with ChemChina for one week in order to move forward in talks with Makhteshim employees, who threatened a strike over their concerns about a wave of layoffs.
Finance Committee chairman MK Moshe Gafni (United Torah Judaism) opened the discussion with a warning about the unraveling of Israel's textile industry due to Chinese imports and the export of manufacturing to China, which he said should not be repeated.
Koor chairman Ami Erel told the Finance Committee, "As Nochi Dankner's representative, I state that there is no risk of closing Makhteshim Agan. We intend to continue the factories' operations whether or not there is a sale. The vast majority of employees will continue to work at the factories. The factories will not be closed; not now and not after a deal. There is no sale of Israel's natural treasures."
Nochi Dankner-controlled IDB Holding Corp. Ltd. (TASE:IDBH) unit Koor Industries Ltd. (TASE:KOR) owns 44.1% of Makhteshim.
Last Tuesday, Makhteshim's managers and workers committee announced that management had suspended negotiations with ChemChina for one week, and that the workers committee would in turn call off its planned personal and vindictive campaign against Dankner.
On October 11, Koor announced a pending deal to sell Makhteshim to ChemChina at NIS 21.70 per share. Makhteshim's share price soared 27% on the day of the announcement, erasing half the premium on the company's market price prior to the announcement.
"We found friendship and love for Israel," said Erel about ChemChina. "The first subject that the company's executives raised was the employees. We'll continue to be active in the company and on the board of directors. We'll continue to own 30%."
Erel went on to say that there would be layoffs at Makhteshim regardless if a deal was closed with ChemChina or not. "Makhteshim must undergo urgent streamlining whether there is a deal or not. It doesn’t matter if there is a deal or not, the company must be streamlined, and we initiated the process before ChemChina's offer. Makhteshim has already published a profit warning; it's part of the problem we're dealing with. We'll make every effort to put the company back on track to profitability and growth. This process is also difficult for us.
"To conclude, Makhteshim will continue to produce in Israel, almost all of the employees will continue to have jobs. The retirement of some employees will take place over years, and the employees will receive much greater severance packages than mandated by law in the labor contract. I am sure that when all this is over, everything will be clear."
Makhteshim's share price 0.6% by midday to NIS 17.30, giving a market cap of NIS 7.9 billion.
Published by Globes [online], Israel business news - www.globes-online.com - on October 25, 2010
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