Hapag-Lloyd and Israeli private equity firm FIMI are reworking their $4.2bn takeover of ZIM in an effort to overcome fierce political opposition and secure approval from the Israeli government.

The German liner giant said it has held several rounds of talks with Israel's economy, finance and defence ministries, and will submit an improved proposal by the end of September that includes stronger safeguards around Israel's maritime security and its access to strategic trade routes.

Under the revised structure, the Israeli-controlled company being carved out of ZIM would take on expanded responsibility for the state's golden share and would operate 16 vessels maintaining direct links between Israel and key overseas markets. The golden share, which the Israeli state has held since ZIM's earlier corporate restructurings, gives the government oversight of decisions affecting the country's strategic shipping interests.

FIMI would own the new ZIM Israel operation, while the threshold at which a single foreign shareholder must notify the Israeli government would be lowered from 24% to 10%. FIMI has also pledged not to list the company outside Israel.

Hapag-Lloyd chief executive Rolf Habben Jansen said the revised proposal would secure access to key shipping routes, including those from Asia, while preventing foreign interference in the movement of sensitive Israeli cargo. ZIM, founded in 1945, has long been viewed in Israel as a national asset with obligations to maintain the country's trade lifelines during emergencies, which is why the size and scope of the carve-out has drawn scrutiny.

Resistance to the takeover has mounted since the deal was announced in February. The original transaction valued ZIM at $35 per share and would cement Hapag-Lloyd's position as the world's fifth-largest container line, taking combined capacity above 3m teu. The deal is one of the largest container-shipping takeovers in recent years and comes as the industry, having consolidated heavily over the past decade into a small group of major alliances and operators, continues to pursue scale amid volatile freight rates and geopolitical disruption to key routes.

Workers staged strike action soon after the transaction was unveiled, and a Knesset committee subsequently questioned whether the 16-ship Israeli operation would be sufficient to fulfil ZIM's wartime logistics responsibilities.

Political pressure intensified in July, when Prime Minister Benjamin Netanyahu and Defence Minister Israel Katz urged that the deal be scrapped, arguing the existing structure did not adequately protect national security.

The transaction has already received ZIM shareholder approval, but it still requires Israeli and other regulatory clearances before it can proceed. The end-of-September deadline for the revised proposal marks the next key milestone to watch, as does the response from the Israeli ministries and ministers who have so far opposed the deal.

Source: Splash247