Hapag-Lloyd and Israeli private equity firm FIMI Opportunity Funds’ proposed $4.2 billion acquisition of Zim is facing growing opposition from Israeli authorities, casting fresh doubt over whether the deal will secure government approval.
Eight government agencies are expected to submit their positions on the transaction, but a meeting scheduled to discuss the deal has been postponed to 9 September, according to a report published by Israel’s financial newspaper Calcalist.
Most agencies are reportedly expected to oppose the acquisition, although no final decision has been made.
The buyers are expected to appear before Israel’s Companies Authority after the agencies submit their positions, giving them another opportunity to defend the transaction.
Tzadok Radker, head of Israel’s Shipping and Ports Authority, has also submitted a second opinion opposing the deal.
The authority said additional information provided by Hapag-Lloyd, FIMI and Zim had failed to resolve its concerns about the independence and long-term viability of the proposed new Israeli shipping company.
Under the revised proposal, Zim Israel would operate 16 ships and be launched without debt.
Hapag-Lloyd has also pledged to establish an Israeli regional division employing 200 people, alongside a technology centre with 250 to 300 full-time workers. Employment guarantees would remain in place for 10 years.
However, the Shipping and Ports Authority argues that Zim Israel would remain dependent on Hapag-Lloyd for shipping capacity, international routes, key markets and operational infrastructure.
It also raised concerns about the company’s ability to meet obligations linked to Israel’s golden share if financial or operational difficulties arise.
FIMI rejected the authority’s assessment, saying it was based on “fundamentally incorrect factual assumptions”.
The investment fund said substantial changes had been made to the proposal to address concerns raised during the review.
The companies have submitted around 600 pages of supporting material, including assessments from Ernst & Young, Boston Consulting Group and former Shipping and Ports Authority chief Yigal Maor.
They have also responded to 120 of 174 questions submitted by the eight government agencies.
FIMI insists the proposed Zim Israel would be a strong and independent Israeli shipping company, free from foreign control.
Several government bodies, including the Defence, Economy, Agriculture and Transport ministries, are reportedly opposed to the transaction.
The Accountant General’s Department within the Finance Ministry is also understood to oppose it, while the Finance Ministry and National Maritime Administration have yet to submit final positions.
A decision is expected after the Companies Authority reviews the agencies’ positions.
If the deal is rejected, FIMI is not expected to challenge the decision in court, while Hapag-Lloyd could consider legal action.