Hapag-Lloyd Revises $4.2 Billion Bid For Israeli Shipping Firm Amid Security Concerns

German shipping company Hapag-Lloyd has changed its $4.2 billion plan to buy Israel’s Zim Integrated Shipping Services as it tries to address concerns from the Israeli government over the country’s shipping security.

The new proposal includes a weekly direct shipping service between Israel and the Far East. It also gives the Israeli government more protection over Zim Israel’s ships and operations, especially during emergencies.

Hapag-Lloyd CEO Rolf Habben Jansen presented the revised plan during a visit to Israel last week. He was joined by Ishay Davidi, head of Israeli private-equity firm FIMI Opportunity Funds, which is involved in the deal.

The companies said the changes would give Israel more control over its shipping and help protect its supply chains.

The proposed takeover has faced opposition from Israeli officials and Zim workers.

Israel’s Defence Minister Israel Katz has objected to the sale in its original form. Defence Ministry officials have also raised concerns about giving control of a major Israeli shipping company to a foreign company.

The ministry said over the summer that the original proposal did not do enough to protect Israel’s national security interests, especially during emergencies.

Shipping is particularly important to Israel because about 98% of its imports arrive by sea. These include basic goods such as food and medicine.

The deal is also being reviewed by Israeli bodies responsible for defence, state-owned companies, ports and shipping.

Under the original deal, Hapag-Lloyd would take over Zim’s international business.

FIMI would set up a separate Israeli company called New Zim, also referred to as Zim Israel. This company would keep the shipping assets covered by the Israeli government’s special state share, known as a golden share.

The golden share gives the government special rights over Zim. These include requiring the company to keep a presence in Israel and maintain a certain number of Israeli-owned vessels.

The original plan called for New Zim to have between 12 and 16 ships. It would run services to Israel through the Atlantic and Mediterranean.

The revised proposal adds a weekly direct service between Israel and the Far East.

It also gives the Israeli government stronger protections over Zim Israel’s fleet and operations. These protections would be especially important during emergencies.

Hapag-Lloyd and FIMI also plan to keep vessel management and professional expertise in Israel. The proposal includes safeguards for employees.

Earlier reports on the revised plan said New Zim would receive 16 vessels. That is more than the 11 ships required under the existing golden-share rules.

The company would also operate without debt.

The vessels would remain available to the Israeli government, while New Zim would continue to provide shipping links for Israel if services are disrupted.

The two companies agreed on the takeover in February.

Hapag-Lloyd offered $35 in cash for each Zim share. The deal is worth about $4.2 billion. Hapag-Lloyd said the offer was 58% higher than Zim’s share price on Feb. 13.

Zim shareholders have already approved the deal. It still needs approval from the Israeli government and other regulators.

If the deal goes through, Hapag-Lloyd will take control of Zim’s international business. That includes profitable routes between East Asia and the Americas.

Hapag-Lloyd’s shareholders include a subsidiary of Qatar’s sovereign wealth fund, which owns 12.3% of the company. Saudi Arabia’s Public Investment Fund owns another 10.2%.

New Zim, meanwhile, would keep the Israeli assets covered by the golden share.

References: Times of Israel, The Logistic News