Israeli Defense Ministry Comes Out Against Sale of Zim to Hapag-Lloyd
Opposition continues to mount in Israel to the agreed sale of Zim to Hapag-Lloyd and the formation of a smaller domestic shipping company by an investment fund. Israel’s Defense Ministry issued a statement late on Sunday saying the deal does not adequately safeguard the security interests of Israel, while media reports said Prime Minister Benjamin Netanyahu said the sale is not currently on the government’s agenda.
Israel’s Defense Ministry Director of Security Almog Cohen conducted an extensive review of the transaction and issued the opinion, which was adopted by the Defense Ministry. According to the report by the Israeli media outlet Calcalist, the Defense Ministry’s concerns center on the new Zim, which it sees as a limited shipping company. It believes the new company’s routes would be confined to the Mediterranean, significantly reducing access to the United States and the Far East.
Israel received military equipment and support from the United States and has developed supply relationships in the Far East. The review raised concerns about maintaining these supply chains and the “implications for Israel’s maritime independence.” It notes that during the war in Gaza, Israel faced shipping boycotts, sanctions, and trade restrictions, and without Zim, maintaining supply chains could be a problem
Under the terms of the sale agreement, Hapag would acquire the international services and most of Zim’s vessels, which operate under long-term charters. A small fleet of Zim-owned vessels would be maintained by the new company formed by investment firm FIMI. Others have questioned the financial strength of the new company and its ability to remain a going entity with limited routes.
Another concern that has been voiced in the past is the large investments in Hapag-Lloyd by the sovereign funds from Qatar and Saudi Arabia. Calcalist also reports that the Chilean government, which has taken a critical stance against Israel, is also among Hapag’s investors. The Ministry of Defense reportedly expressed concern that the shareholders could pressure Hapag during a future military conflict.
Israel’s Defense Minister, Israel Katz, also pointed out that the state continues to hold its Golden Share in Zim. Among the provisions, it can block a change of control of the company or the sale of assets.
Media reports said the Prime Minister responded to questions during a meeting of the Israeli parliament, saying review of the proposed transaction is currently “not on the agenda.” Media reports indicate that Hapag and Zim are preparing data from the government review, which would be required for approval and completion of the deal.
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The Defense Ministry joins Israel’s Agriculture, Economy, and Transportation ministries, which have also announced opposition to the sale. Israel’s Shipping Authority has also announced its opposition, and on Sunday, the union representing Zim employees thanked the prime minister and defense ministry for joining the opposition. It said the government is taking an “unambivalent stance on the side of the Israeli economy and national strength.”
Ishay Davidi, the Chairman, CEO, and founder of FIMI Opportunity Funds, has repeatedly said the new Zim would meet all the obligations to the country and would be a strong shipping partner. Hapag has not commented on the apparent growing opposition to the acquisition.