Hapag-Lloyd’s acquisition of Zim, a shipping company with ties to the Israeli state, is a costly but also courageous step. It could also send a signal for Germany as a shipping hub. And what about the international container shipping industry? It’s hard to predict…
First things first: Yes, the €4.2 billion deal isn’t a done deal yet (you can find the key elements and background of the transaction in the new March issue of HANSA). As things stand, three hurdles remain:
- ZIM’s general meeting must approve the deal. Given the considerable protests following the announcement of the sale, it’s important to keep an eye on public opinion.
- The State of Israel must establish the legal framework. The political heavyweights in the often contentious government and the Knesset parliament have already taken their positions and, despite a “special arrangement,” have railed against a perceived sell-off of national security.
- The third hurdle: the usual consultation with antitrust authorities
If everything goes according to plan, it would be a significant development. After several years of relative calm – albeit with much speculation and fruitless negotiations – there will likely be another takeover among the top 10 container shipping companies. It would be the first such transaction since 2017/2018. At that time, the last wave of consolidation ended following Maersk’s acquisition of Hamburg Süd, Cosco’s takeover of OOCL, Hapag-Lloyd’s acquisition of UASC, and CMA CGM’s acquisition of APL, as well as the merger of the Japanese carriers NYK, MOL, and K Line under the ONE umbrella. Since then, the major shipping companies have focused on “organic growth,” meaning additional tonnage, and this also applies to Hapag-Lloyd.
The Hamburg-based company has also been interested in acquisitions. These efforts, however, have not been successful, for example, with the Korean carrier HMM, for which the Korean government is still seeking a buyer.
The discussions among Hapag-Lloyd’s largest shareholders are likely to be interesting in the future. Since the acquisitions of CSAV and UASC, the shareholders table now includes representatives from the City of Hamburg, the Kühne Holding, Chileans of Croatian descent, and two major Arab entities: the Qatar Holding and the Saudi Arabian sovereign wealth fund PIF. They will now also have to participate in discussions regarding the formerly Israeli business. While this doesn’t necessarily have to lead to difficulties, it is certainly noteworthy given the political situation in the Middle East.
The fact that Hapag-Lloyd prevailed against other competitors in the months-long struggle for Zim and found a way forward in this—let’s call it—”complex situation” is a positive sign, also for Germany as a whole. The publicly listed shipping company is, among other things, an important charter partner and employer, and the City of Hamburg also benefits from dividends.
For Hapag-Lloyd, Zim opens up new opportunities in certain trade areas. At the same time, the Israelis have by far the highest charter rate among global carriers, at over 85%. This keeps the risk of overcapacity within reasonable limits. The price is indeed high, and Zim shareholders are being paid a substantial premium. This also demonstrates Hapag-Lloyd’s apparently very strong financial position. The stock market is reacting positively: investors seem to view the transaction more as an opportunity than a risk. Following the announcement of the takeover agreement, the share price rose from €110.40 to €123.90 on February 23.
The only remaining question is: How will the competition react? Is this the starting signal for another wave of consolidation? The number of attractive targets is now very limited. Zim was considered one of the few remaining “major” candidates. Hapag-Lloyd has therefore potentially pulled off a risky, but very successful, deal.
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Michael Meyer
Editor-in-Chief
HANSA International Maritime Journal &
Hansa.news global
