Shares in Israeli-based Zim Integrated Shipping Services (ZIM) were flat today as investors continued to mull over acquisition interest in the group.
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Major Liners In Tow
Last week it emerged that shipping giant Hapag-Lloyd had submitted an initial offer for ZIM, which is Israel’s largest container carrier and the world’s tenth-largest liner.
Hapag is number five in that list, meaning it would give the combined entity close to a 10% share of the global container market, according to Alphaliner. Only Mediterranean Shipping Co. of Switzerland (21.3%), Denmark’s Maersk (AMKBY) (13.9%), CMA CGM of France (12.3%) and China’s Cosco (CICOF) (10.7%) claim double-digit market shares.
Indeed, other global liners, including Mediterranean Shipping Co and Maersk, have also been linked to potential acquisition interest in ZIM.
The Hapag-Lloyd deal however, has barriers in place. According to reports, the move is already facing resistance from ZIM’s workers’ committee, which has warned that since Qatari and Saudi sovereign funds are among Hapag’s shareholders this could pose a national security risk to Israel. The Israeli government also holds a golden share in ZIM, which could hinder any potential deal.
Qatar’s state investment authority has a holding worth about 12.5%, with Saudi Arabia’s sovereign wealth fund close to 10%.
Looking at Alternatives
Last month, the ZIM board reportedly rejected an offer from its own chief executive Eli Glickman and shipping firm Ray Car Carriers head Rami Ungar to buy the company at a $2.4bn valuation. ZIM said at the time that it had formed a team to review strategic alternatives regarding the company’s future.
The uncertainty over the company’s future has been more swim than sink for its share price rising nearly 50% over the last three months – see above.
According to consultants BDO, despite unprecedented levels of global uncertainty, there have been record levels of M&A activity in the shipping sector in recent years. It is being driven by macroeconomic and geopolitical events, increasing decarbonization regulations and improved financial trading performance.
Is ZIM a Good Stock to Buy Now?
On TipRanks, ZIM has a Moderate Sell consensus based on 1 Hold and 3 Sell ratings. Its highest price target is $13.30. ZIM stock’s consensus price target is $11.83, implying a 41.03% downside.
