ICL takes over Solutia and FMC Joint Venture for $255 million

01/09/05 Israel Chemicals Ltd. will acquire the business and assets of Astaris a 50/50 joint venture between Solutia Inc. and FMC Corporation, for $255 million on a debt-free basis.

Astaris is a leading US manufacturer and marketer of specialty phosphates, thermal phosphoric acid, and phosphorus chemicals for industrial use with revenues of $350 million in 2004.

The acquisition of Astaris' business and assets stems from ICL's strategy to increase its higher value-added downstream products business. Astaris' business activities are highly complementary to those of ICL Performance Products, one of ICL's four operating segments, which produces specialty phosphate downstream products for a variety of industries. Following receipt of required regulatory approvals and satisfaction of other closing conditions, Astaris' business will become a part of the Performance Products segment.

The acquisition of Astaris' complementary business activities representsa major step for ICL in the US and significantly strengthens its Performance Products segment's geographic reach and manufacturing capability in specialty phosphates, especially in North and South America. In addition to its US operations, Astaris operates two production facilities in Brazil, a market with significant growth potential and where ICL Performance Products already maintains operations and recently acquired Adicon Industria E Comercio De Additivos Ltda, a food additives manufacturing company. While Astaris produces and sells thermal phosphoric acid and phosphate salts in the US and South America, and markets phosphorus and derivatives, ICL Performance Products manufactures purified phosphoric acid in Israel and phosphate salts and food additives in Europe and in China, with sales concentrated in Europe and the Far East.

Aside from complementary geographical operations, technology and products, ICL management anticipates additional synergies between the two businesses based on ICL's extensive logistical and marketing capabilities and favorable access to raw materials, which will result in increased capacity and more efficient sourcing of production. Based on their respective financial results, combined sales of ICL Performance Products and Astaris are approximately $1 billion.

The acquisition is a strategic fit between the two entities, increases ICL's presence in the US and positions it as a global force for production and marketing of downstream specialty phosphates products. The synergies arising from the acquisition will enable ICL to immediately expand its higher value-added downstream products business, enable ICL Performance Products to compete more effectively in world markets and create additional value for ICL shareholders.

ICL intends to finance the acquisition, the terms of which have been approved by its Board of Directors, from its existing cash flow and credit facilities. The transaction is subject to approval by US Antitrust authorities and the bankruptcy court overseeing the reorganization under Chapter 11 of Solutia and other customary conditions. The purchase price may be adjusted based upon certain financial criteria of Astaris on the date of closing.

Deutsche Bank Securities Inc. acted as sole financial advisor to ICL on this transaction.