Container shipping group Hapag-Lloyd said on Monday it would buy Israeli rival ZIM Integrated Shipping Services for $4.2 billion in a deal that would consolidate its position as one of the world's biggest ocean shipping companies.
"The merger would secure Hapag-Lloyd's market position as the fifth-largest shipping line in the world with a modern fleet of over 400 vessels," Hapag-Lloyd said, a day after it said it was in advanced talks to acquire ZIM.
Shares in Frankfurt-listed ZIM leapt 28.8% following the news, while Hapag shares sank 8%.
Hapag-Lloyd said the deal would be funded with the company's cash reserves and external financing of up to $2.5 billion.
News of the takeover prompted ZIM's employees to go on strike at the company's headquarters in Haifa on Sunday, the Times of Israel reported.
ZIM said management was in talks with the workers' union to avert any "negative impact" on operations and that it understood the employees' position, the Times of Israel said.
HAPAG-LLOYD'S MARKET SHARE TO RISE TO NEAR 9%, JPM SAYS
JP Morgan analysts said a deal would allow Hapag-Lloyd to grow its global market share from 7% to just under 9% without having to boost investment in a drawn-out process.
Hapag said talks were well advanced for FIMI to take on the obligations under Israeli rules. The Israeli government has a so-called "golden share" in the company, which gives it control over that part of the business, said Globes.
ZIM, valued at almost $2.7 billion as of Friday's close, said in November it had been reviewing its strategic options for several months after receiving a non-binding takeover proposal.
"This can be considered as a play to gain extra capacity near term (in lieu of fleet capex) ... Delivery slots at shipyards are not readily available near term," JP Morgan analysts said in a note.
ZIM has operations in more than 90 countries serving 300 ports worldwide, according to its website.
(Reuters)
