<Israel Chemicals Ltd. (TASE: ICL), the cash cow of the Tel Aviv Stock Exchange (TASE) in general and the Ofer Brothers in particular, was all set for another day of declines on the market, an examination of the pre-session transactions in the share reveals. But with the release of the announcement by the company of its share buy back, the falls, which had reached almost 1.9%, theoretically, were replaced by gains (also theoretically) of up to 4%.
Israel Chemicals, now described by some as the new "people's share" has fallen 12.8% since the beginning of the month, meaning the last three trading days. Since climbing to an all-time of NIS 81.10 on June 18, the share has plummeted 34.4%. But as the trading so far today indicates, the negative sentiment could become history, since the company is set to buy back 5% of its shares. 37.6% of the company's shares are publicly held. The purchase will be made in both on-floor and off-floor transactions, and will be completed by June 30, 2009, said the company in a statement today. "Under the prevailing conditions, the share buy back is justified and appropriate, considering the company's business results," it added.
Israel Chemical's market cap, before the announcement, stood at around NIS 68.5 billion. This implies that at the current share price, the company will spend NIS 3.42 billion on the share buy back. However, given the extended period over which the buyback is to be made and the fact that company's current share price is periodically impacted by the volatility in global commodity prices, the exact value of the share buy back cannot be calculated at this point.
The NIS 3.42 billion that will be paid to those shareholders who choose to accept Israel Chemical's offer will follow the $300 million that the company has already decided to distribute following the release of its second quarter financials, in which it posted a record profit. .
Published by Globes [online], Israel business news - www.globes-online.com - on September 4, 2008
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