Hapag-Lloyd and FIMI’s proposed $4.2 billion acquisition of Zim is facing growing opposition from Israeli authorities, raising doubts over whether the deal will receive government approval.
A meeting between eight government agencies expected to submit their positions on the transaction has been postponed. It is now scheduled for 9 September, according to a report by Calcalist.
Most of the agencies are expected to oppose the transaction. However, no final decision has been made.
Hapag-Lloyd and FIMI are expected to receive a hearing at Israel’s Companies Authority after the agencies submit their positions. This could provide the buyers with another opportunity to make their case.
Israeli Shipping Authority maintains opposition to Zim deal
Tzadok Radker, head of Israel’s Shipping and Ports Authority, has submitted a second opinion on the proposed acquisition. His position remains against the deal.
The authority plays an important role in the review process, as several government agencies rely on its professional assessment.
Its latest opinion came after Hapag-Lloyd, FIMI and Zim submitted additional information about the proposed transaction.
The buyers have outlined several commitments for a new Israeli shipping company that would be separated from Zim’s international operations.
Under the proposal, Zim Israel would operate 16 ships. Hapag-Lloyd has also pledged to establish a new Israeli regional division with 200 employees.
In addition, the plan includes a technology centre with between 250 and 300 full-time employees. Employment guarantees would remain in place for 10 years.
The proposed Zim Israel would also begin operations without debt. The current Zim has approximately $2.9 billion in debt.
Concerns over Zim Israel’s independence
Despite these commitments, the Shipping and Ports Authority remains concerned about the independence of the proposed company.
“The cumulative weight of the positive data presented is limited in relation to the fundamental issues relating to effective control, economic and operational independence, the company’s sustainability over time and the preservation of the national interests underlying the special share (the golden share),” the authority’s opinion stated.
According to the authority, the additional information has not addressed its main concerns.
“Therefore, the position of the Shipping Authority remains unchanged. There is no additional information presented that indicates a change in the position conveyed in the past, and therefore there is no reason to approve the transaction in its current form,” the opinion added.
The authority argues that Zim Israel would remain dependent on Hapag-Lloyd for access to capacity, international routes, key markets and operating infrastructure.
It also believes the smaller Israeli company could face challenges in meeting the requirements linked to the state’s golden share if financial or operational problems emerge.
However, the authority acknowledged some positive elements. These include commitments to retain existing Israeli seafarers and train additional workers.
FIMI challenges authority’s assessment
FIMI rejected the Shipping and Ports Authority’s conclusions.
“The Shipping Authority’s position is based on fundamentally incorrect factual assumptions,” FIMI said.
The investment fund said it had made significant changes to the proposal to address concerns raised during the review process.
Hapag-Lloyd, FIMI and Zim have submitted around 600 pages of material supporting the transaction. They have also provided opinions from Ernst & Young, Boston Consulting Group and former Shipping and Ports Authority head Yigal Maor.
According to the report, the buyers received 174 questions from the eight government agencies and have answered 120 of them.
FIMI maintains that the proposed Zim Israel would operate as an independent Israeli shipping company.
“The new Zim will be an independent and strong Israeli company at all levels of its activity, independent of any foreign entity,” FIMI said.
Decision on Hapag-Lloyd-Zim deal expected next month
Several Israeli government bodies are currently opposed to the transaction.
These reportedly include the Defense Ministry, Economy Ministry, Agriculture Ministry and Transportation Ministry. The Accountant General’s Department within the Finance Ministry is also understood to oppose the deal.
Meanwhile, the Finance Ministry and National Maritime Administration have yet to submit their final positions.
An official decision is expected after the Companies Authority receives the positions of the relevant government bodies.
If the deal is rejected, FIMI is not expected to challenge the decision in court. Hapag-Lloyd, however, could consider legal action.
