The Hapag-Lloyd ZIM acquisition would see the German carrier take over the Israeli shipping line in a $4.2bn cash deal, marking one of the most significant consolidation moves in container shipping.
HapagLloydAG and FIMI, Israel’s largest private equity fund, have won a tender for the takeover of the Haifa-based shipping line ZimShipping (ZIM). Subsequently, the two carriers signed a merger agreement on Monday.
As part of the upcoming transaction, Hapag-Lloyd plans to purchase the entirety of ZIM’s shares, which would lead to the Israeli carrier’s delisting from the New York Stock Exchange (NYSE).
Hapag-Lloyd’s and FIMI’s agreed valuation for the carrier is based on $35 per share, which means around $4.2bn. Based upon ZIM’s market capitalization on the NYSE, this represents a 58% premium over last week’s closing.
Unlike in earlier mergers, Hapag-Lloyd does not intend to pay with equity. All ZIM shares will be bought with money, and ZIM’s current shareholders will not become shareholders in Hapag-Lloyd. The current ownership stakes in the German shipping line will thus not be diluted.
Contrary to ZIM’s current valuation of just under $2.7bn, Hapag-Lloyd’s market capitalization cannot really be determined.
Due to the carrier’s very limited free float, Hapag-Lloyd’s share price is not indicative of its actual value and the shipping line was therefore kicked out of Germany’s S-DAX index in 2019. Theoretically, it stands at over EUR 25.0 bn.
Under the proposed setup, Hapag-Lloyd will acquire ZIM’s international and intercontinental activities, which are not subject to special Israeli regulatory restrictions, designed to keep the carrier in national hands.
FIMI meanwhile will then acquire certain operations that the Israeli Government deems of ‘national’ and ‘geostrategic’ relevance, and that therefore fall under provisions of the state’s so-called ‘Golden Share’.
When it comes to potential mergers and acquisitions in the ocean carrier space, Alphaliner numbers show that there is not a lot of scope left for ‘realistic’ purchases.
From the perspective of the ‘big’ ocean liners with fleets of at least 2.00 Mteu (including Evergreen with marginally fewer slots), there are only five candidates that could make sense to acquire – assuming that was at all possible: HMM, Yang Ming, ZIM, Wan Hai and PIL.
Other carriers are ‘too large’ and ‘out of reach’ while any carrier outside the top-12 would barely make an impact in terms of economies of scale. Outside the top-12, no shipping line has a market share above 1% and most are regional specialists without a global footprint.
Source: Alphaliner
