Business in Brief / Israel Chemicals Executive Warns of Job Losses

888 becomes target after failed takeover bid, Psagot fund goes on accidental bond-buying binge and Tel Aviv shares end lower in very light trading.

Bloomberg

ICL executive warns: Sheshinski tax hikes will cost jobs

A senior Israel Chemicals executive warned Monday that it would cut back on investment and employment unless the government acted to reduce its take of the company’s profits to no more than 42%. “It doesn’t make a difference if the government’s take is calculated from the Sheshinski tax, the Law for Encouraging Capital Investments or from royalties. All we care about is the results. If they are fair and we can compete, we’ll invest,” the executive said, on condition of anonymity. He spoke as a government team was due to meet to decide how to prevent the new tax regime planned under the Sheshinski committee recommendations from leading to massive dismissals from ICL factories in the Negev. Under the Sheshinski proposals, the government’s take would rise sharply from its current 30%. The ICL executive said the Sheshinski formula would increase the take to 67%, but others say it will be just 50%. ICL’s current capital spending program calls for investing up to 7 billion shekels ($1.8 billion) and creating 700 new jobs. ICL shares ended down 0.7% at 23.53 shekels ($5.98).

888 becomes target after failed takeover bid

888 Holdings, the online gaming company controlled by Israelis Avi and Aaron Shaked and Shay and Ron Ben-Yitzhak, may become a takeover target itself after its bid for rival Bwin.party was bested on Friday by GVC Holdings. “For 888, this is a blow, given a strong strategic fit between the businesses and the desire to build scale in a consolidating market,” Canaccord Genuity analysts wrote in a note. Bwin.party ditched an agreed deal with 888 on Friday in favor of a higher, 1.1 billion-pound ($1.7 billion) offer from GVC, creating a sports betting heavyweight in a sector being reshaped by consolidation. GVC and 888 spent months battling for Bwin, as firms try to bulk up in response to higher tax bills and tighter regulation in Britain and continental Europe, but 888 said it could not justify making a higher offer, signaling victory for GVC. “I think unless you have scale, you are going to struggle to compete,” GVC CEO Kenny Alexander, who will lead the new group, told Reuters. 888 shares ended down 2.6% at 167 pence in London.

Psagot fund goes on accidental bond-buying binge

A Psagot bond fund bit off more than it could chew last month when it offered to buy bonds amounting to nearly all the funds it has under management. The Psagot High-Yield Defensive Fund accidentally offered to buy 21 million shekels ($5.3 million) of bonds issued by El’Ezra Holdings and another 52 million in Africa Israel Properties bonds. The trouble is that the 73 million shekels in total amounted to nearly all its 75 million shekels in assets under management. Psagot said the wayward manager asked the bourse to restore the situation to what it was before the mistaken order, but the proposal was rejected. Instead, the Africa Israel bonds, which are investment grade, were sold to other Psagot funds in an off-the-floor transaction, at the same price they were bought for in the first place. The El’Ezra bonds were sold to investors outside the Psagot group at a loss. Experts attributed the foul-up to automated trading software, which calculated it was a good time to buy the bonds, but didn’t set a limit on the amount to be bought

Tel Aviv shares end lower in very light trading

Tel Aviv shares ended lower in light trading on Monday, weighed down by the energy sector. The benchmark TA-25 index lost 0.4% to end at 1,602.53 points, while the TA-100 declined 0.3% to 1,394.17, as a mere 934 million shekels ($237.5 million) in shares changed hands. Technology shares, however, bucked the trend, led by a 4.9% gain for TowerJazz to 51.41 shekels, after the semiconductor maker said it received an advance payment of $30 million from a customer to help finance expansion of a production line. LivePerson rose 2.4% to 33.89. Strauss Group added 3.2% to 54.94. In the fixed-income market, the government’s 10-year shekel bond fell 0.16%, to leave its yield at 2.28%.