Hapag-Lloyd Gets Extension to Address Concerns and Rework Bid for Zim
Hapag-Lloyd has received a 30-day extension from the Israeli authorities to rework its proposed acquisition of Zim, with a new proposal expected by the end of September, according to reports in the Israeli media. Hapag said it will “alter structural aspects” to address the concerns raised by multiple agencies in Israel.
The move comes as the Israeli government was due to issue its formal opinion on the transaction after months of review. Under a “golden share” issued to the government when Zim went public in 2021, the government has to approve a change of ownership in the company, along with requirements to maintain Israeli leadership of the company. Six of the eight Israeli government ministries, according to the media outlet Calcalist, were set to oppose the transaction, including the ministries of Economy, Agriculture, Transport, and likely defense, with the state’s Shipping Authority also against the transaction.
Calcalist had reported that an inter-agency meeting scheduled for August was delayed as the opposition grew, but it was scheduled to take place on September 9. Hapag would then have had one final chance to present its case and to attempt to change the position of the government.
Management of the German shipping company said it had been meeting with the government and others and understood key concerns. The media said the opposition focused on access to international markets and foreign control. Questions had also been raised about the strength and long-term strategy for the new Zim Israel, which would be formed by the deal.
Hapag has reportedly said it plans to revise the terms with an aim of “strengthening Israel’s maritime independence and security.” Calcalist and the media outlet Globes report key concessions will include a proposal to revise the golden share, which would govern the new Zim Israel owned by the investment fund FIMI. Reports are that the percentage of the company’s shares that could be sold to foreign interests without triggering the golden share would be reduced from the current 24 percent to just 10 percent. Further, FIMI is committing to only offer shares of the new Zim Israel on the Israeli stock exchange.
The companies had pointed to elements of the proposal, saying Zim Israel would emerge as a stronger company focused entirely on Israel. It would be debt-free and take ownership of 16 ships, exceeding the 11 required in the current golden share, and focus on regional shipping to Israel. The revised proposal will place all 16 ships at the disposal of the government.
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Hapag is also reportedly reworking elements of the deal regarding Zim Israel’s access to international shipping. They reportedly will provide additional access to key shipping routes, including routes from Asa. The media reports said the new company will also have access to a shipping pool run by Hapag and increase the amount of refrigerated capacity on its vessels. Hapag and FIMI are also reported to be increasing their proposed investments in the Israeli maritime workforce, including training programs.
It remains to be seen if Hapag will be able to win over the required approvals for the deal. The Israeli unions have opposed the proposed merger, including a brief work stoppage after the $4.2 billion deal was announced in February. Israeli media says the union continues to oppose the deal and says Hapag-Lloyd is only delaying the inevitable rejection of the merger. Hapag continues to express its commitment to the deal, saying it will “mark another important milestone in the close relationship between Germany and Israel.”
