Israel Chemicals (TASE: ICL: NYSE: ICL) has entered to an agreement with Canadian Allana Potash Corp. (TSX: AAA)(OTCQX: ALLRF) to acquire through an indirect wholly-owned subsidiary, all outstanding shares in the company. Israel Chemicals, which already holds a 16.36% stake in Allana, will pay C$0.50 per share for a total of C$137 million ($109 million). The deal, which is supported by Allana’s board, will be paid for in cash and Israel Chemicals shares.
Israel Chemicals bought its 16.36% stake in Allana last year, as part of an agreement giving the Israeli company the rights to purchase and market one million tons of potash mined from the Danakhil mine in the Afar region of northeast Ethiopia
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Allana holds a concession to mine potash in Ethiopia, through its subsidiary, Allana Potash Afar Plc. Allana estimates that its Danakhil project could yield up to one million tonnes of muriate of potash production per year for 25 years.
Israel Chemicals offer is in line with the company’s “Next Step Forward” strategy to broaden its sources of raw materials globally while reducing production costs and focusing on high growth emerging markets that will support the company’s growth over the next decade. The company currently produces potash at mines located in Israel, Spain and the UK, and in 2014 it sold over five million tonnes of potash worldwide.
Israel Chemicals said that acquiring ownership of Allana will enable the company to control the development of the Danakhil project, accelerate pre-construction engineering design work, as well as secure project financing and reduce the company’s risks associated with the project.
Israel Chemicals added that it believes that the Ethiopian government is fully supportive of developing the country’s potash resources in order to unlock the potential of agriculture in Ethiopia.
Directors, officers and shareholders of the Company (including LMM) holding an aggregate of 13.5% of the Common Shares have agreed to support the Transaction and each has entered into a support agreement with ICL.
