Did Minister of Finance Yair Lapid bat an eyelid when he learned about the breakup of the potash cartel and expected plunge in global potash prices? Let us review the incoming minister's most dramatic statements. 24 days after taking up the post, before learning who's who, Lapid announced, "I oppose the merger of Israel Chemicals with Potash Corporation. Israel's natural resources are a public asset."
Potash Corporation of Saskatchewan Inc. (NYSE; TSX: POT), which already owns 14% of Israel Chemicals Ltd. (TASE: ICL), was in talks to acquire control of the company from Idan Ofer and his partners.
This could have been a great opportunity to break up the package tailored with little forethought, which has exploited a public asset for a tycoon since 1992, to retailor it and to generate substantial tax revenues for the Treasury which could have been directly used to cover the deficit.
In reality nothing would have changed. Instead of an English foreign investor - the Ofer family - we would have gotten a Canadian foreign investor - Potash Corporation. Instead of Israeli manipulations, we would have gotten a Canadian-Israeli production line.
The government could have exploited the opportunity to open the first agreement it signed with the company, rebuild the relationship so that the public could also benefit from it, and guarantee Negev operations and employees' salaries in the contract. All of this could have been based on an especially high market cap reflecting the global price of potash, which is set by cartels, the uniqueness of the Dead Sea, and the company's profitability.
But Lapid and the Ministry of Finance rushed to block everything. They did not stop to check before closing the door. The share price has plummeted, the world has changed. And as Lapid wrote on his Facebook page about the non-appointment of Jacob Frenkel, "Isn't it a pity?"
Published by Globes [online], Israel business news - www.globes-online.com - on July 30, 2013
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