Israel Corp. to acquire state's Zim stake for $115m

The sale will be carried out at a $235 million company value for Zim Israel Navigation, higher than its $200 million equity.

Sources inform “Globes” that Israel Corp. (TASE:ILCO) is acquiring the state's stake in Zim Israel Navigation Co. at a company value of $235 million. Israel Corp. chiefs reached an agreement with the Government Companies Authority at web-posting.

Israel Corp., controlled by Ofer Brothers, will acquire 49% of Zim, becoming the sole owner of the company. Israel Corp. currently owns 50% of Zim. Israel Corp. will pay the state $115.15 million for its stake.

The parties agreed on the price after several hours of negotiations and after the Government Companies Authority received two valuations for Zim. Israel Corp. will acquire Zim for more than its equity of $200 million as of September 30, 2003.

Zim is Israel's largest shipping company, and one of the ten largest container shipping companies in the world. Ofer Brothers also own a second shipping company.

Last week, Israel Corp. announced that it would buy the state's stake in Zim. It was the only participant in the Government Companies Authority tender for Zim. Israel Corp. decided to buy the share after reaching an agreement with Zim employees over the employment of Israeli officers on the ships, and on the number of ships.

The agreement with the workers also covers Zim's future split into two companies: one for international operations, 90% of its business; and the other for its Israeli operations, 10% of Zim's business. The split is intended to reduce government involvement in Zim.

The government decided to keep a golden share in Zim after its privatization. After the company is split, the state will own a golden share in the company handling the Israeli operations only. This arrangement should make it easier for Israel Corp. to find an Israeli or foreign partner for Zim's international operations, which will have no government involvement.

Published by Globes [online] - - on January 13, 2004

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