By Ludwig Burger
FRANKFURT, Feb 16 (Reuters) – The container shipping company Hapag-Lloyd is in talks to acquire its Israeli competitor, ZIM Integrated Shipping Services. If successful, this deal will strengthen Hapag-Lloyd's position as one of the largest ocean shipping companies in the world.
Currently, no binding agreements have been signed, and the deal will need approval from the Israeli government due to ZIM's regulations, Hapag-Lloyd stated in a release on Sunday.
Following the announcement, ZIM's shares, which are traded in Frankfurt, surged by 31.9% on Monday, while Hapag-Lloyd's shares dropped by 3.6%. Neither company has commented further on the situation.
The Israeli newspaper Globes reported that Hapag-Lloyd, along with its partner FIMI Opportunity Funds (an Israeli private equity firm), won a competitive bid for ZIM.
With a bid of over $3 billion, Hapag-Lloyd plans to purchase ZIM's international operations, while FIMI would take over the Israeli segment, according to the report.
The potential acquisition led to a strike by ZIM's employees at the company's headquarters in Haifa on Sunday, as reported by the Times of Israel.
ZIM stated that management is in discussions with the workers’ union to prevent any negative effects on the company's operations, acknowledging the workers' concerns, as per the Times of Israel.
JP Morgan analysts believe that the deal could increase Hapag-Lloyd's global market share from 7% to almost 9%, solidifying its position as the fifth-largest ocean shipping company without needing to invest significantly or undergo a lengthy process.
Hapag-Lloyd mentioned that negotiations are advanced for FIMI to fulfill the regulatory requirements set by Israeli laws. The Israeli government holds a "golden share" in ZIM, granting it control over that portion of the business, Globes reported.
Valued at nearly $2.7 billion as of Friday’s market close, ZIM indicated back in November that it had been exploring its strategic options for several months after receiving a non-binding takeover proposal.
According to JP Morgan analysts, this acquisition could be seen as a way for Hapag-Lloyd to gain additional capacity in the short term, as available delivery slots at shipyards are currently limited.
Hapag-Lloyd stated that the transaction would also require regulatory approvals and a vote from ZIM's shareholders.
Founded in Israel in 1945, ZIM operates in over 90 countries and serves approximately 33,000 customers across more than 300 ports globally, according to its website.