UPDATE 2-Potash seeks Netanyahu help in Israel Chem takeover

* Israel previously rejected Potash approaches

* Analysts: Deal unlikely in near term, if at all

* ICL, Israel Corp shares jump

JERUSALEM, Oct 31 (Reuters) - Potash Corp, the world's largest fertiliser maker, is ramping up efforts to acquire smaller rival Israel Chemicals (ICL) and has appealed directly to Israel's prime minister to back a deal.

The Canadian company controls 13.84 percent of ICL, the world's sixth-largest fertiliser maker, and has long sought to raise its stake.

Previous attempts by Potash to take over ICL since its initial investment in 1998 have been rebuffed by regulators.

Any acquisition would be complicated because resources where ICL has potash and phosphate mining rights are state-owned.

As a foreign buyer, Potash would need approvals from the Government Companies Authority, the prime minister and the Antitrust Authority.

``This deal cannot be ruled out, however it is unlikely to happen in the near term,'' said Virginie Boucher-Ferte, an analyst at Deutsche Bank, in a note to clients.

Conglomerate Israel Corp owns 52.3 percent of ICL, while some 34 percent of ICL, which has a market value of about $15 billion, is traded on the Tel Aviv Stock Exchange. Potash's market value is around $35 billion.

Israel Corp said Potash chief executive Bill Doyle has met Israeli Prime Minister Benjamin Netanyahu to push for the deal while financial daily Calcalist said Netanyahu instructed his staff and the finance ministry to examine it.

``The company confirms it is aware that Canada's Potash is in talks with various government agencies that included a meeting with the prime minister regarding examining the possibility of merging ICL with Potash,'' Israel Corp said in a statement on Wednesday.

Israel Corp officials declined to comment beyond the statement. The finance ministry said it had not received any formal request.

A year ago, Potash sought to raise its stake in ICL - which also produces a third of the world's bromine - to 25 percent. The government gave initial approval but Potash pulled the request when regulators took too long to respond.


Shares of ICL were up 4.7 percent, while Israel Corp's shares were 5.5 percent higher in late trade.

``We see value in ICL shares even in the absence of interest from Potash,'' said Joseph Wolf, an analyst at Barclays Capital who rates ICL as ``overweight''. ``The potential merger highlights the attractiveness of ICL's low cost position.''

According to Calcalist, Potash seeks 100 percent of ICL.

Doyle said last week Potash's equity investments are the second best potash assets after the company's own.

``We own them with the long-term goal of having a majority position in each one. It doesn't happen overnight, but we think they're a very, very valuable part of our company, and it's more than just a monetary thing,'' he told analysts.

Potash last week posted a 22 percent drop in third-quarter profit.

Boucher-Ferte said it was not clear whether Potash would offer ICL shareholders a premium for their stock.

She said Potash would have to give Israel the right to repatriate licence rights if a hostile country or entity took control of Potash.

Analysts believe the deal would benefit Israel Corp, which would swap control of ICL for a 20 percent stake in Potash and turn the company into a more recognised international player.

Wolf said that for Potash, buying ICL would complement its 30 percent of APC, a Jordanian company that mines the Dead Sea.

With Israel headed for elections in January, discussions will likely be on hold for the time being.

In 2010, Canada's government blocked a bid for Potash by BHP Billiton on the basis it would not benefit the country.

``We believe it is likely that the Israeli government will come to the same conclusion regarding a takeover of ICL,'' said Sophie Jourdier, an analyst at Liberum Capital, in a note.