Jerusalem appears poised to torpedo a $4.2 billion deal for German shipping line Hapag-Lloyd to take control of Israel’s Zim freighter service, amid mounting concerns that the acquisition could put the country in dire strategic and national security straits.

This week, Defense Minister Israel Katz joined a list of political leaders objecting to the sale to the German shipping behemoth, siding with Defense Ministry officials reviewing the potential acquisition who concluded that the proposed sale doesn’t safeguard Israel’s national security interests, especially during emergencies, according to his office.

The purchase agreement as currently formulated would see a small slice of Zim Integrated Shipping Services spun off and kept in Israeli hands, meeting a requirement for the formerly state-owned enterprise to maintain maritime freight operations to and from Israel.

However, the lion’s share of Zim’s operations, including shipping routes between East Asia and the Americas, and between Asian ports, would come under the control of Hapag-Lloyd, whose shareholders include a subsidiary of Qatar’s sovereign wealth fund, which owns a 12.3 percent stake, and Saudi Arabia’s Public Investment Fund, which has a 10.2% stake.

Noting the “strategic danger” to Israel’s critical maritime trade routes, Deputy Minister Almog Cohen on Sunday warned Prime Minister Benjamin Netanyahu that it would be a “disaster to hand the key to Israel’s maritime gateway” to a buyer with Qatari-Saudi shareholders.

Netanyahu said in response that “it is not on the agenda,” according to Hebrew press reports.

According to Katz, the “golden share” in the Haifa-based firm held by the state allows the government to block the sale if it concludes that it harms national security or threatens Israel’s vital maritime interests.

Hapag-Lloyd said it still expected the acquisition to go ahead.

“We continue to advance the deal and are seeking approvals of regulators both internationally and domestically, including the government, Israel Companies Authority and the Israel Competition Authority,” a spokesperson said in an emailed response. “We believe we will receive all approvals.”

The deal has been under discussion since February, when the German firm signed an agreement to purchase its rival for $4.2 billion, alongside Israeli private equity fund FIMI Opportunity Funds, which would hold the Israeli spin-off, to be known as “New Zim.”

The state’s golden share gives it special rights to require Zim to maintain a presence in Israel, including a certain number of vessels that must remain Israeli-owned so that the country’s shipping needs are served.

Under the proposed deal, the golden share would be transferred to New Zim. With a fleet of........

© The Times of Israel