Israel Chemicals (ICL) said on Friday, March 28, 2015, it had made 137 million Canadian dollars (109.5 million USD) offer to buy Canada’s Allana Potash, a deal it hopes will expedite development of mine in Ethiopia.
ICL already possesses 16.36% of Allana, whose Danakil project in northeast Ethiopia could yield up to 1 million tons of muriate (chloride), the commodity form of potash, per annum for 25 years. It is going to pay 50 Canadian cents per share for the rest of the shares.
The takeover by ICL is supported by Allana’s board of directors, yet subjected to conditions and regulations, ICL told. The acquisition by ICL, the world’s sixth-biggest potash producer, would move about the mine closer to construction and confer ICL a future low-cost source of fertilizer.
“Acquiring ownership of Allana will enable ICL to control the development of the Danakil project, hastens pre-construction engineering design work, as well as secure project financing,” ICL said in a statement.
Allana is studying potential for producing the premium product sulfate of potash at the site besides muriate of potash.
The Canadian company said it is improbable that another bid will emerge and the offer is possibly the best alternative for Allana given challenging conditions for junior potash companies, said Raymond James analyst Steve Hansen in a note.
The deal should be closed by August 17, 2015.
ICL is one of the three largest providers of the crop nutrient potash to China, India and Europe and the second-largest Israeli company on Tel Aviv Stock Exchange.