However, the fertilizer giant said no deal has been formulated.
"There is no assurance that a deal will be reached, or that parties will sign an agreement," the company said in a brief statement.
PotashCorp declined further comment.
The Canadian company sought to increase its stake in ICL earlier this year from about 14 per cent to 25 per cent, but dropped its attempt in the summer after delays in the government review process.
PotashCorp chief executive Bill Doyle said in June that the company decided to withdraw its offer both because the deal was taking a "very long time" and because ICL's terms weren't clearly defined, adding that PotashCorp would reappraise its options.
Shares in ICL, which were briefly halted in trading on the Tel Aviv Stock Exchange, were up about five per cent, to give the company a stock market value of about C$15.1 billion.
Although PotashCorp holds a 14 per cent stake, it does not have any seats on the ICL board. Israel Corp. owns roughly a 52.3 per cent interest.
Shares in Israel Corp., the country's largest holding company, were up nearly six per cent. In addition to ICL, Israel Corp. has investments in energy, transportation, shipping and technology.
Israel Corp. said PotashCorp held a meeting with Israeli Prime Minister Benjamin Netanyahu in connection with a possibility for a potential merger deal.
"Senior officers of the company have been accompanying the discussions between Potash and Israeli governmental authorities," Israel Corp. said.
CIBC analyst Jacob Bout said ICL's operations are relatively low cost, but the "last thing PotashCorp needs is more potash capacity" as it already has far more capacity than it is selling.
"This would be a large swallow with ICL market value of $15 billion," Bout wrote in a note to clients.
Desjardins analyst John Hughes suggested ICL could give PotashCorp a position in the European market.
"They're interested in getting into Europe and that's a big component of what ICL is doing," he said pointing to the roughly 35 per cent of the company's sales that go to that region.
However, Hughes suggested a takeover deal would face significant regulatory hurdles including anti-trust concerns as PotashCorp confronted difficulty when it wanted to increase its stake in ICL earlier this year.
"You've got to wonder if it would ever actually happen," he said.
ICL mines potash from the Dead Sea and the Negev desert, as well as in Spain and England.
The Canadian government blocked a hostile bid by BHP-Billiton for PotashCorp in 2010.
The company has about six million tonnes of annual potash capacity, is also a large producer of industrial products and magnesium and also holds a stake in IDE Technologies Ltd., water treatment and desalination technology firm.
PotashCorp is the world's largest fertilizer company by capacity.
Last week, PotashCorp reported a drop in third-quarter profits due in part to delays in reaching contracts with customers in China and India.
The company also cut its earnings guidance for 2012 by about 14 per cent.
Doyle said the company was prepared to wait for China and India to make deals in light of their need for fertilizer to grow food production and predicted that demand and sales would rebound significantly in 2013.
PotashCorp shares closed up 18 cents at $40.15 on the Toronto Stock Exchange on Wednesday.