Israel Chemicals Offers $109 Million for Allana Potash

ICL hopes completing its acquisition of the Canadian company will expedite development of Ethiopian muriate mine.

Reuters
Reuters
Israel Chemicals' Dead Sea Works potash plant in Sodom, October 2013.
Israel Chemicals' Dead Sea Works potash plant in Sodom, October 2013.Credit: Reuters
Reuters
Reuters

Israel Chemicals said on Friday it had made a $137 million Canadian dollars ($109.5 million) offer to buy Canada’s Allana Potash, a deal it hopes will accelerate development of a mine in Ethiopia. ICL already owns 16.36% of Allana, whose Danakhil project in northeast Ethiopia could yield up to 1 million tons of muriate, the commodity form of potash, per year for 25 years. It will pay 50 Canadian cents per share for the remaining shares. The offer is a 51.5% premium to Allana’s closing price on Thursday, prior to the offer being announced.

On Friday, Allana shares jumped 44% to 47.5 Canadian cents in Toronto. ICL shares edged 0.43% higher in New York for the day.

The acquisition, to be paid for in cash and shares in ICL’s common stock, is supported by Allana’s board of directors, but is still subject to conditions and regulations, ICL said. A takeover by ICL, the world’s sixth-biggest potash producer, would push the mine closer to construction and give ICL a future low-cost source of the fertilizer. The mine is small compared to those operated by top producers Uralkali and Potash Corp of Saskatchewan, but would add to a global capacity glut.

“Acquiring ownership of Allana will enable ICL to control the development of the Danakhil project, accelerate pre-construction engineering design work, as well as secure project financing,” ICL said in a statement.

Along with muriate of potash, Allana is studying potential for producing the premium product sulfate of potash at the site. Norwegian fertilizer giant Yara International is developing an adjacent SOP project, and Allana CEO Farhad Abasov said this month that he planned to talk with Yara about a partnership

Yara spokesman Bernhard Mauritz Stormyr declined comment on ICL’s offer to Allana, but the Canadian company said it has granted ICL a right to match any competing offer. It’s unlikely that another bid will emerge, and the offer is likely the best option for Allana given challenging conditions for junior potash companies, Raymond James analyst Steve Hansen said in a note. The deal must close by August 17.

ICL is the second-largest Israeli company on the Tel Aviv Stock Exchange and one of the three largest suppliers of the crop nutrient potash to China, India and Europe.

Click the alert icon to follow topics:

Comments

SUBSCRIBERS JOIN THE CONVERSATION FASTER

Automatic approval of subscriber comments.

Subscribe today and save 40%

Already signed up? LOG IN

ICYMI

Election ad featuring Yair Lapid in Rahat, the largest Arab city in Israel's Negev region.

This Bedouin City Could Decide Who Is Israel's Next Prime Minister

Dr. Claris Harbon in the neighborhood where she grew up in Ashdod.

A Women's Rights Lawyer Felt She Didn't Belong in Israel. So She Moved to Morocco

Mohammed 'Moha' Alshawamreh.

'It Was Real Shock to Move From a Little Muslim Village, to a Big Open World'

From the cover of 'Shmutz.'

'There Are Similarities Between the Hasidic Community and Pornography’

A scene from Netflix's "RRR."

‘RRR’: If Cocaine Were a Movie, It Would Look Like This

Prime Minister Yair Lapid.

Yair Lapid's Journey: From Late-night Host to Israel's Prime Minister