IN WHAT is being acclaimed as a clever navigation of a difficult situation Hapag-Lloyd has announced it is in advanced negotiations for a potential acquisition of Zim Integrated Shipping Services Ltd.
To date no binding agreements have been entered into, Hapag emphasised in yesterday’s [15 February] announcement. “The required approvals of the transaction by the Management Board and the Supervisory Board of the Company, as well as by the competent corporate bodies of the contractual counterparties have not yet been granted.
“Furthermore, the consent of the State of Israel based on its special rights set forth in the articles of association of ZIM is required. In this context, negotiations with FIMI Opportunity Funds, an Israeli financial investor, for the assumption of the obligations under these special rights are well advanced. The completion of the transaction would require additional regulatory approvals and the consent of the shareholders’ meeting of ZIM,” Hapag-Lloyd said.
Under the proposed arrangement FIMI will take over ZIM’s domestic operations and services as well as its owned tonnage, Hapag-Lloyd the international operations including chartered vessels, and the Israeli Government will retain its ‘golden share’. The total deal is valued at over US$3.5 billion.
An interesting wrinkle is that amongst Hapag-Lloyd’s various takeovers in the last two decades – including Canada’s CP Ships, Mexico’s TMM, Chile’s CSAV, the Netherland’s NileDutch and Germany’s Deutsche Afrika-Linien – is 2017’s United Arab Shipping Company, owned by several Middle Eastern countries.
Qatar Investment Authority, through its subsidiary Qatar Holding LLC, and the Public Investment Fund of the Kingdom of Saudi Arabia, became new key Hapag-Lloyd shareholders, now holding 10.2% and 12.3% respectively.
Hapag-Lloyd currently sits at Number 5 in the Alphaliner global Top 10, with ZIM at Number 10, measured by deployed TEU capacity of 2,378,477 and 704,450 respectively. If the deal goes through the combined entity will still not reach COSCO Group at 3,592,198 TEU (Number 4) but will raise Hapag-Lloyd’s contribution to its Gemini Co-operation with Maersk.
ZIM, which has run hot and cold in Australia and New Zealand over several decades, currently has only one remaining service, the ZAX from China operated as a vessel sharing agreement with MSC’s Panda service.
Hapag-Lloyd participates in multiple services, including three with South East Asia, two with East Asia and one with West Coast North America to which it contributes tonnage, plus others through slotting arrangements.