Stock of shipper ZIM soars to three-year high as Hapag-Lloyd agrees to takeover

Shares of Israel's ZIM Integrated Shipping Services, listed in New York, soared Tuesday more than 25% to a 3.5-year high after the company announced an agreement according to which it will be acquired at a premium by Germany’s Hapag-Lloyd. The deal is set to strengthen Hapag-Lloyd’s position as the world’s fifth-largest container shipping company.

ZIM shares were also edging higher in early trading on Wednesday as of this writing.

ZIM shares jumped 25.5% to $27.85 per share on the New York Stock Exchange on Tuesday, the highest level since August 2022.

Markets were reacting to the company’s announcement that it agreed to be acquired by Germany's Hapag-Lloyd. Under the terms of the agreement, Hapag-Lloyd will acquire ZIM for $35 per share in cash, valuing the company at about $4.2 billion. The offer represents a 58% premium to the stock’s closing price on Friday.

The transaction is expected to close by late 2026 and has been unanimously approved by the ZIM board. However, it remains subject to approval by ZIM shareholders, regulators, and the Israeli government, which holds a "special state stake" in the company.

Hapag-Lloyd shares reacted modestly – in over-the-counter trading in the U.S. on Tuesday, they added less than 1% to $69.00 per share.

The combination is expected to cement Hapag-Lloyd’s position as the world’s fifth-largest container shipping company, ZIM said. “Mergers are one obvious way that shipping giants can add to their overall capacity at a time when freight rates and container volumes have tumbled,” Barron’s points out.

The combined company will have more than 400 vessels, capacity exceeding 3 million TEU, and annual cargo volumes of more than 18 million TEU in 2027, according to the company’s statement.

ZIM also said Hapag-Lloyd has entered into a binding memorandum of understanding with Israeli investment firm FIMI under which Israel’s special state stake in ZIM, subject to government approval, would be transferred to a newly created FIMI subsidiary, called "New ZIM." The new entity will receive 16 vessels and focus on directly connecting Israel with major ports in the EU, the U.S., the Mediterranean, and the Black Sea, while also gaining access to the Gemini shipping partnership between Maersk and Hapag-Lloyd.

The creation of New ZIM is intended to help maintain maritime shipping routes and emergency logistics for Israel, as the vast majority of imported goods enter the country by sea, The Times of Israel reported.

Over the last 12 months, ZIM stock is up 38%. Three Wall Street analysts rate it “sell” versus two who recommend “hold.” The average target price remains below current quotes. Investors are also weighing regulatory and operational risks. ZIM’s union launched a general strike on Sunday over concerns about potential layoffs following the transaction, and Israeli authorities are considering measures to block the merger given the company’s strategic importance to the country, according to Motley Fool analyst Joe Tenebruso.