German carrier Hapag-Lloyd and private equity fund FIMI are preparing to complete the US$4.2 billion acquisition of Israeli shipping company Zim, signed last month, and to delist the company from trading. The deal is still subject to regulatory review.
Industry sources say Danish shipping company Maersk is preparing a contingency plan to acquire Zim if the current transaction fails to secure approval. Maersk previously participated in the acquisition process but lost the tender after offering US$29 per share, compared with Hapag-Lloyd's winning bid of US$35 per share.
Sources indicate that Maersk could potentially use its veto rights within the Gemini cooperation framework to prevent Zim from becoming a full member of the agreement. However, this may not prevent Zim from accessing vessel slots on Hapag-Lloyd ships under certain arrangements.
© ZIM
According to people close to the company, Maersk faces fewer regulatory complications related to Israel's golden share. Hapag-Lloyd's shareholder structure includes Saudi and Qatari sovereign wealth funds that together hold about a quarter of the company's shares. These investors could raise regulatory questions because Israel classifies those countries as hostile.
Maersk believes it could complete an acquisition of Zim without an Israeli partner while meeting regulatory requirements. The company has also discussed the possibility of including XT, controlled by Udi Angel and Idan Ofer, as a local partner, but has prepared for the possibility of proceeding independently. Maersk declined to comment.
Hapag-Lloyd has stated that it will continue calling at Israeli ports and remains committed to serving the Israeli market in routine and emergency situations.
Negotiations with regulators are expected to be led by Avi Licht, who served as Israel's Deputy Attorney General for Economic and Fiscal Affairs between 2009 and 2016. Licht, now a partner at the Meitar law firm, is advising Zim and coordinating discussions with Hapag-Lloyd and FIMI.
The request for approval has not yet been submitted to the Government Companies Authority, which has raised several issues that must be addressed before filing.
Licht also represented the state during Zim's 2014 debt restructuring, which totaled about US$3.4 billion. At that time, US$1.4 billion of debt was converted into equity, and Israel Corporation, controlled by Idan Ofer, injected about US$200 million into the company.
Under the proposed structure, the new Zim focused on Israeli operations would operate 16 vessels and employ about 1,000 workers, compared with 82 vessels and about 5,900 employees in 2014.
The restructured company would retain the right to operate two container services in the Middle East and one service between Israel and the United States. It would also gain access to Hapag-Lloyd's global network and vessel slots, and could benefit from the Gemini cooperation between Hapag-Lloyd and Maersk covering 26 routes between Asia and the U.S. West Coast and other Asian services.
Source: CTech
