Shares of ZIM Integrated Shipping Services (ZIM 2.85%) popped on Tuesday after the Israeli cargo carrier struck a deal to be acquired by larger rival Hapag-Lloyd (HPGLY +0.20%).
By the close of trading, ZIM's stock price was up more than 25% after rising as much as 35% earlier in the day.
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An enticing offer for ZIM shareholders
Under the terms of the deal, Hapag-Lloyd will purchase ZIM for $35 per share in cash. That represents a premium of 58% compared to its stock's closing price on Friday. The agreement values ZIM at roughly $4.2 billion.
The transaction is projected to close later this year, subject to regulatory and shareholder approval.
NYSE: ZIM
Key Data Points
"Since our IPO in January 2021, we have distributed an extraordinary $5.7 billion in dividends to shareholders," ZIM CEO Eli Glickman said in a press release. "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."
The combination would cement Hapag-Lloyd's position as the world's fifth-largest container shipping company, with a fleet of more than 400 vessels. ZIM serves 33,000 customers across 300 ports in over 90 countries.
Risk factors for investors to consider
ZIM's stock price closed off its highs of the day following reports that its unionized workforce was conducting a general strike to protest layoffs expected upon the deal's completion.
Additionally, Israeli regulators are reportedly considering measures to block the deal due to ZIM's strategic importance to Israel.
