Israel Shipping Authority and ZIM Workers Oppose Hapag-Lloyd Acquisition

The meeting scheduled for this week between eight government bodies tasked with providing their opinion on the sale of ZIM to Hapag-Lloyd and FIMI Opportunity Funds has been postponed by a month to September 9. A majority against approving the deal is emerging in this meeting, after which a hearing will be held at the Government Companies Authority for Hapag-Lloyd and FIMI to present their final position in an attempt to change the decision.

It should be noted that as of today, the Israeli Ministry of Defense, the Ministry of Economy, the Ministry of Agriculture, and especially the Israeli Ministry of Transport—relying on the professional opinion of the Shipping and Ports Authority (RASPAN)—oppose the deal. The only two bodies that have yet to present an official position are the Ministry of Finance and the National Security Council, although the Accountant General's opposition to the deal is widely known.

According to reports, the head of the Shipping and Ports Authority (RASPAN), Zadok Radker, sent a second opinion on the deal last week, in which he reiterated that it should not be approved. RASPAN is the professional body upon which most government entities required to approve the deal rely, even if not formally.

According to reports, the head of RASPAN stated in the new second opinion that "the cumulative weight of the positive data presented is limited relative to the fundamental issues concerning effective control, economic and operational independence, the company's sustainability over time, and the preservation of national interests underlying the Special State Share (Golden Share). Therefore, the Shipping Authority's position remains unchanged, and the additional information presented does not indicate a change in the position previously conveyed; thus, there is no room to approve the deal in its current format."

RASPAN's letter was sent after Hapag-Lloyd, FIMI, and ZIM itself submitted a detailed presentation explaining the benefits of realizing the deal. The purchasers, who signed for the acquisition of ZIM in February for $4.2 billion, presented Hapag-Lloyd's commitment to "ZIM Israel," which would be split from ZIM International and hold 16 ships. The Germans committed to establishing a new Israeli region within ZIM with 200 jobs and a technology center employing 250-300 full-time employees. The purchasers also committed to maintaining a regional third-party agent association in Israel, jointly providing services to other countries, and granting job security to employees for ten years.

The new ZIM Israel, which would be separated from the current company whose activities would merge into Hapag-Lloyd, was presented as a company where 100% of its activities would be focused on Israel, compared to 25% today. The new ZIM was also presented as a strong company with zero debt, compared to a debt of $2.9 billion today, and as one that would provide connection to a global network of liner shipping companies in major ports. The purchasers submitted opinions supporting the sale from three entities: Ernst & Young, the consulting firm BCG, and Yigal Maor, Radker's predecessor as head of RASPAN. The purchasers received 174 questions from the eight government bodies, answered 120 of them, and provided 40 files totaling 600 pages to support their position.

As mentioned, last week the former director of RASPAN, Dr. Yigal Maor, published a dramatic opinion (see link) in which he claims that the establishment of the 'New ZIM' under the control of the FIMI Fund, as part of the merger deal with Hapag-Lloyd, is a strategic upgrade that will ensure full Israeli ownership, availability during emergencies, and a surge in the number of Israeli officers.

ZIM Workers' Committee: Aligning with RASPAN's Position

The ZIM Workers' Committee stated: "The ZIM Workers' Committee expresses unequivocal support for the emerging decision to prohibit the sale of the company to foreign entities and fully aligns with the position of the Shipping and Ports Authority (RASPAN) opposing the deal. It is inconceivable to transfer independent control of the State of Israel's shipping routes to foreign entities that may prove hostile to national interests."

"The 'Small ZIM' model has no right to exist. A downsized company will not be able to provide the critical logistical and security response that the State of Israel needs in times of emergency. We call on the Israeli government to recognize the security danger inherent in this deal and to act to promote an alternative with an Israeli entity that will ensure the strategic interests and security of the state."

The ZIM Workers' Committee further stated that ZIM does not have debts but rather regular business obligations used for growth and development, as exists in any healthy and successful company.