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    Delek in merger talks with Sonol; Canadian tobacco giant gets bankruptcy protection.

    Delek Fuel, Israel's second-largest fuel company, is in preliminary talks to merge with the country's third-largest provider, Sonol, to create the largest fuel company in the country. Details of the negotiations were not made public.

    Delek operates some 220 gas stations across Israel. It also has numerous stations abroad, following its $234.5 million acquisition of more than 234 U.S. gas stations and convenience stores in 2001. It is not known whether the international holdings will be included in the deal.

    Sonol, a subsidiary of Granite Hacarmel, has no operations outside of Israel.

    In other news, Canada's oldest tobacco company filed for protection in bankruptcy court after being slapped with a $1.36 billion tax bill by Quebec two weeks ago.

    JTI-Macdonald Corp., the Canadian subsidiary of Japan Tobacco Inc. and maker of the Export A brand of cigarettes, obtained an order from Justice James Farley of the Ontario Superior Court of Justice giving it protection under the Companies' Creditors Arrangement Act until Sept. 22, under the supervision of monitor Ernst & Young.

    The order lets the firm continue its business activities and freezes the province's pursuit of the money it says JTI owes for its alleged part in cigarette smuggling from the United States into Canada in the 1990s. (The firm was owned by R.J. Reynolds Tobacco Holdings Inc. during the period.)

    In a release, JTI-Macdonald said the order was needed because Quebec's revenue ministry had begun seizing cash from JTI customers as it sought to collect on the Aug. 11 tax ruling in its favor by Quebec Superior Court.

    JTI-Macdonald, the No. 3 cigarette maker in Canada with 500 employees, said the seizures in Quebec led to "an immediate deprivation" of 40 percent of its revenue.

    "In the absence of CCAA protection the effect of these seizures would have unavoidably led to the bankruptcy of JTI-Macdonald," the company said.

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