Israel Chemicals Reels From Lapid Comment

The two companies (Israel Corp. is the parent company of Israel Chemicals)  have been reeling since Minister of Finance Yair Lapid was quoted on Wednesday vowing to pursue a “militant policy” to keep control of Israel’s natural resources, in particular his intention to block a deal in the works for the purchase of Israel Chemicals by Potash Corporation of Saskatchewan.

The companies have lost their entire gain since reports of the possible sale surfaced in October 2012. Those reports made Israel Chemicals and Israel Corp. more attractive to foreign investors, who showed growing interest in development. But that interest was paralleled by growing public fears about harm to Israel’s national interests and to Israel Chemicals’ employees.

Sources have told Globes that Lapid’s remark prompted foreign special situation funds to sell their holdings. Special situation funds invest, by definition, on the basis of particular circumstances, such as an expected deal, and are not usually long-term investors.

In response to Lapid’s remarks, Barclays Capital analyst Joseph Wolf said on Thursday, “We expect continued news on the Potash front, but would not expect any formal offer until Israel’s 2013 budget is passed. While Minister of Finance Lapid has stated his opposition to a deal, we expect that ultimately economics and not politics will drive any final decision as this potential deal has foreign investment implications that could reach across industries.”

Meanwhile, Lapid made more headlines by castigating Israeli billionaire Idan Ofer for his decision to resettle in London for the lower taxes.

During a discussion on legislation to encourage investment, Lapid said that something ought to be done to prevent Ofer from moving. “We cannot allow individuals to become wealthy on the backs of the public,” he said.

Ofer, 57, is rated the richest man in Israel, whose worth is estimated to be $6.5 billion, enough to place him 182nd on this year’s Forbes billionaires list.

Ofer and his brother Eyal are the largest shareholders in the Israel Corporation, established by their father Sammy, who passed away in June 2011. The Israel Corporation is a holding company that owns dozens of corporations and businesses, among them the Zim shipping company.

If Ofer does move to London, he would by no means be the first wealthy Israeli to do so in order to take advantage of special tax breaks the British government makes available to individuals with a net worth of at least one million pounds sterling. Among other Israelis currently in London is Lev Leviev, chairman of Africa Israel, who left for the UK about five years ago.

“We cannot have a situation where people get rich using public resources, and when the moment comes for them to pay their fair share in taxes they decide to pay them to a different country,” railed Lapid, who also said he was “surprised” that so many companies were still enjoying tax breaks for reasons that no longer apply.

Ofer’s office had no comment, referring reporters instead to a bland statement issued last week when Ofer’s move was announced: “Idan Ofer is an international businessman who spends a significant amount of time outside of Israel.”

This article appeared in print on page 6 of the April 12th, 2013 edition of Hamodia.