As ZIM’s future as a public company remains up in the air, the ocean carrier’s board of directors is attempting to stave off a new proxy fight.
An investor group led by Mor Gemel & Pension Ltd., Reading Capital Ltd. and Sparta 24 Ltd., which controls over 5 percent of the container shipping company’s stock, has nominated three directors to the ZIM board.
The investor group has not released disclosures or a public statement about the board battle, with ZIM revealing the proxy fight in a letter to shareholders on Tuesday. The company said the lack of disclosures, which is required under U.S. securities laws, raises “serious questions about their transparency and intent.”
Related Stories
ZIM has support from a major proxy advisory firm, with Institutional Shareholder Services (ISS) urging shareholders to vote for all eight of the ocean carrier’s directors and against the three outsider candidates.
In November, ZIM appointed its two newest independent board directors, Yoram Turbowitcz and Yair Avidan, replacing the resigning Yair Caspi and Yoav Sebba.
The proxy fight follows the company’s rejection of a takeover bid from its chief executive, Eli Glickman and Israeli shipping tycoon Abraham Ungar, as well as other reports that fellow ocean carrier Hapag-Lloyd had made an offer to acquire the company.
The board confirmed in November that the company was undergoing a strategic review, which could include a sale among multiple options. ZIM has received multiple indications of interest from potential bidders, with Israeli tech publication Calcalis saying the company has received at least three acquisition offers.
This review is being conducted solely by the independent board, with Glickman and the management team not participating in the evaluation of the strategic alternatives.
According to the shareholder letter, the board “unanimously determined that [Glickman’s buyer group] materially undervalued the company.”
The board has engaged independent financial and legal advisors to assist in the review process, and has formed its own transaction committee.
According to the letter, the minority shareholders seeking to reshape the board are making a campaign based on misleading assumptions about the strategic review process.
“The dissident group did not meaningfully engage with us on the issues they now raise and chose to submit their nominations without prior discussion or warning,” the board said in the letter. “Their campaign appears to be rooted in the false assumption that the board is planning to sell the company to the management group at an inadequate price.”
The board also claims that the proxy fight launch only came after media reports had suggested they were interested in considering the bid from Glickman’s team “at a price below ZIM’s cash balance.”
“The rumor that the board was willing to accept such an undervalued bid was clearly false,” the board said.
Additionally, the board was critical of the dissident group’s methods in seeking out an overhaul at ZIM.
“The dissident group has not articulated any other ideas to improve ZIM’s operations, fleet strategy, capital allocation, or competitive positioning,” the letter said, noting that the only substantial change outlined would be to issue a special dividend, which would “undermine ZIM’s liquidity and create substantial risk to shareholder value given our charter-intensive model, which requires adequate cash to navigate industry cycles.”
Criticism was also lobbed at the three nominees by the minority investor group—Keren Bar-Hava, Ron Hadassi, Ran Gritzerstein—noting that all of them they had no apparent global shipping, logistics, maritime or industrial experience.
ZIM’s investors will be able to vote on the nominees at the ocean carrier’s annual shareholder meeting on Dec. 26.
In its investor presentation released ahead of that meeting, the company highlights that its stock price has grown 306 percent since the company went public in February 2021. This nearly triples that of Hapag-Lloyd’s 128 percent growth in that time frame, as well as Maersk’s 106 percent growth.
Additionally, ZIM has expanded its vessel fleet from roughly 70 to 129 vessels, and doubled its container-carrying capacity to 709,000 20-foot equivalent units (TEUs). And although it charters almost 88 percent of its vessels, that number is down from nearly 97 percent in 2021.
“Our charter-intensive fleet model gives us flexibility to adjust capacity as market conditions evolve,” said the board. “At the same time, the company has steadily increased the proportion of owned or long-term chartered vessels, improving fleet quality and reducing exposure to short-term charter volatility.”
