ZIM
Initially sponsored by the then nascent State of Israel, the shipping company ZIM had the dual mission of transporting Jewish migrants to Israel and guaranteeing the strategic supplies of the young country.
As with everything related to the Hebrew world, controversy, intellectual or not, is guaranteed, for example; we find that some claim (with pride) that ZIM is the acronym for Zionist Israel Maritime, but, for others, ZIM corresponds to the Hebrew tsim which means fleet, without further complications.
The fact is that since 2004 it has become a private company listed on the NY stock exchange and, therefore, its management is supervised or, if you will, conditioned by its shareholders who, with all the logic in the world, expect nothing but equity benefits because that is why they invest in it and not in another.
In the current framework, the disruptions on the route to/from the Far East due to the warlike alterations in the Suez canal have especially harmed ZIM because its brand image, which so strongly links it to the Hebrew state, keeps it from being accepted in the major alliances, ZIM is the awkward colleague.
For months, ZIM’s shares have been falling and falling and there is no hope of a vigorous recovery in the short term, neither for ZIM nor for the container market as a whole.
Despite everything, ZIM, with its 131 ships, its almost 800,000 TEUs of capacity and its 2.5% market share, occupies the number 9 spot in the world ranking of maritime container shipping. ZIM is one of the big players.
The MBO.
With the shipping company’s shares stably low, ZIM’s main managers, led by its CEO, have initiated a massive share buying campaign. What is known as a Management Buyout (MBO). It is the equivalent of a public takeover bid but from within the company. It is not a frequent figure, very few MBOs occur in the business world; furthermore, it requires a very good understanding between the shareholders and the managers who, being at the head of the company, want to take control of it.
Eli Glickman, CEO of ZIM.
The current CEO of ZIM is the figure leading the initiative to buy shares of the shipping company with the goal of converting it into a private company, that is, taking it off the NJ stock exchange. This hypothetical situation would free the shipping company from having to regularly publish its management and financial reports that being listed requires and, on the other hand, to dispense with the oversight of shareholders when setting commercial strategies, whether risky or not.
Glickman has only been at ZIM for a few years, he comes from the management of Israel’s main (state-owned) electric company and in addition to his financial and business training, he has been a commander of a missile ship and a naval attaché in Washington D.C.
The attractively low current share price of ZIM has been the starting gun to initiate the operation to privatize the Israeli shipping company.
Rami Ungar owner of Ray Shipping.
All the shipping background that Eli Glickman might lack, Rami Ungar has in abundance. The last time he made headlines in the specialized press was when the Houthi rebels who control a part of Yemen carried out the first hijacking of a ship heading to the Suez canal (north bound).
It was the car carrier Galaxy Leader, owned by Ray Shipping, chartered at the time by a Japanese shipping company.
Ungar, long considered one of the richest entrepreneurs in Israel, has confirmed his support for CEO Glickman’s initiative, meaning the financial resources for the MBO are covered.
Evercore
This high-level New York-based financial advisory firm is the one that has been unexpectedly hired by the current main shareholders of ZIM to secure a better sale price for the shares than the one offered by the MBO promoters.
Just as there are friendly takeovers and hostile takeovers, there are no notable examples of MBOs that are not always friendly. Therefore, the appearance of the aggressive Evercore could set a precedent for this type of transaction. For now, what has been announced is that Evercore will consult with the shipping company Maersk to participate in the operation, meaning the Danish shipping company would enter as a cornerstone investor in ZIM.
Other partners?
Besides Maersk, other shipping companies like MSC could take the bait, but specialists rule them out; Maersk due to its philosophy (the Danish company has been buying back its own shares for three years, meaning it wants to regain total control) and MSC wants the competition regulators to forget about it a little.
A very different option would be CMA-CGM, because it could have two interesting reasons: first, the Saade family, owner of the shipping company, has good relations with the Arab world, which would mitigate the Jewish side of ZIM, and second, the Franco-Lebanese shipping company’s strong future commitment to the US market (read: multi-billion dollar investments), a market where the Israeli shipping company is well established.
But for now, no shipping company is making a move, perhaps because they all know the “small detail” of the Israeli government’s golden share.
The Golden Share
This legal figure grants special rights to the Israeli government, although, today, it does not own any shares in the shipping company. Special rights are understood to mean that, for example, Zim must make up to thirteen ships available to the government in cases of national interest, or that it must accept loading war supplies or strategic material if the government demands it.
Víctor Rubio
P.S.: The Ofer family is the one that propelled ZIM to the top and Idan Ofer (son of Samy Ofer, the founder) has continued to control the shipping company from his position as the largest shareholder of Kenon, which, in turn, has been the largest shareholder of ZIM since its format changed to that of a publicly traded company.
Coinciding precisely with the start of the current MBO operation, Idan /Kenon have severed ties with ZIM.
And, according to experts, the relationship between Idan and the /Ungar tandem is not just bad, but extremely bad.
While Idan Ofer has a global vision; the tandem’s vision is above all nationalist. This promises to be interesting!.
