German container line Hapag-Lloyd announced on Monday that it signed an agreement to acquire 100% of the outstanding shares of Haifa-based container liner company Zim Integrated Shipping Services after the approval by the relevant bodies of both parties.

The acquisition is to be carried out by way of a merger of an Israeli subsidiary of Hapag-Lloyd with ZIM, with ZIM continuing to exist as a new, wholly-owned subsidiary of Hapag-Lloyd.

ZIM confirmed that it has entered into a merger agreement, under which Hapag-Lloyd will acquire the company for $35.00 per share in cash.

The consideration is to be $35.00 per ZIM share in cash, with the total consideration amounting to approximately $4.2bln. The transaction will be financed from Hapag Lloyd’s cash reserves and external financing of up to $2.5bln.

The combined company will control more than 400 vessels, with capacity exceeding 3 million teu, and projected annual cargo volume above 18 million teu by 2027.

The transaction has been unanimously approved by ZIM board of directors and is expected to close by late 2026, subject to approval by ZIM shareholders and upon satisfaction of customary closing conditions, including approvals by regulatory authorities and the State of Israel pursuant to the requirements of the Special State Share.

Until the closing of the transaction, Hapag-Lloyd and ZIM will remain separate independent companies and will continue to maintain “business as usual.”

In connection with the transaction, Hapag-Lloyd has entered into a binding memorandum of understanding with Israeli private equity fund FIMI, under which the Special State Share held by the State of Israel in ZIM is intended to be transferred to a newly created subsidiary of FIMI, subject to approval by the State of Israel.

FIMI will create a new container-network operator and liner-service provider, “New ZIM,” with owned tonnage, incorporated in Israel.

The new business, operating under the ZIM trademark, will be owned and run by FIMI, supported by a long-term strategic partnership with Hapag-Lloyd, which includes commercial support for the initial period to allow structured commencement of operations.

According to Hapag-Lloyd, twelve ships and the assets required for the operation of three trade routes are to be transferred from Hapag-Lloyd or ZIM to the new company.

The combination of the two carriers further strengthens ZIM’s global market position, with greater customer offerings via an expanded global network on Transpacific, Intra Asia, Atlantic, Latin America and East Mediterranean trades, complemented by Hapag-Lloyd’s participation in the Gemini network.

FIMI’s newly formed Israeli liner company, “New ZIM,” with a fleet of 16 vessels and a focus on directly connecting Israel to major ports in the EU, US, Mediterranean Sea and Black Sea will have access to Hapag Lloyd’s Gemini network.

The “New ZIM” will receive commercial support from Hapag-Lloyd and will have access to the Gemini Network.

For Hapag-Lloyd, the acquisition secures its position as the fifth-largest container shipping company worldwide.

“I am incredibly proud of the strategic transformation we have executed at ZIM over recent years, which has generated exceptional value for our shareholders,” said Eli Glickman, ZIM’s president and CEO. “Since I joined the company in 2017, ZIM has progressed from a position of negative equity to become an industry leader with strong financial and operational performance. Since our IPO in January 2021, we have distributed an extraordinary $5.7 billion in dividends to shareholders. Upon completion of this transaction, total capital returned will be approximately $10 billion, representing more than five times the company’s initial market value five years ago, or approximately 45 times the capital raised at the IPO.”

Over the past few years, ZIM has added to its fleet portfolio 46 new containerships, ranging from 5,300 teu to 15,000 teu. With established operations in more than 90 countries, ZIM serves approximately 33,000 customers in over 300 ports worldwide.