Israel Chemicals Ltd. (TASE: ICL) announced yesterday that it will sue Volkswagen AG (XETRA: VOW; LSE: VKW) if it does not meet its commitments to the companies' joint venture Dead Sea Magnesium Ltd. (DSM).
Last month, Volkswagen unilaterally announced that it was abandoning the joint venture, in which it owns 35%, with Israel Chemicals owning the rest. The German carmaker announced that it will transfer the stake to Israel Chemicals, leaving the latter with DSM's accumulated debt of over $100 million. Volkswagen's announcement came just before DSM was due to make a loan repayment or recycle the debt.
Porsche AG (XETRA: PAH3) recently acquired the majority stake in Volkswagen, and the takeover included a restructuring of Volkswagen's business. Among other things, Porsche wants to get rid of Swedish heavy trucks maker Scania AB (SAX: SCVA, SCVB), which is controlled by Volkswagen.
DSM has 380 employees. Israel Chemicals' share fell 3.1% in early trading today to NIS 26.90.
Published by Globes [online], Israel business news - www.globes-online.com - on January 20, 2009
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