Ladies and gentlemen, welcome to the Analyst and Investors Conference Call on the Hapag-Lloyd and ZIM Merger Agreement and Live Webcast. Today, Hapag-Lloyd is represented by Rolf Habben Jansen, CEO, and Mark Frese, CFO. I'm Moritz, your call operator. I would like to remind you that all participants will be in a listen-only mode, and the conference is being recorded. The presentation will be followed by a question and answer session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Rolf Habben Jansen. Please go ahead, sir.
Thank you very much, and thanks, everyone, for taking the time to join us here on this call. Where we'd like to update you on the events that we also published about yesterday. In essence, the signing of a merger agreement between Hapag-Lloyd and ZIM. If you like, maybe we just start with a quick summary of it. We have signed the agreement yesterday, as we announced, to buy 100% of the shares for a consideration of $35 per share, which means that the total equity consideration is $4.2 billion. We believe that's an attractive offer for the ZIM shareholders, with a significant premium over Friday's closing price.
We will put in place a bridge facility, but we will pay from available liquidity, and we are partnering with FIMI Opportunity Funds, who will assume the Golden Share obligations in a separate entity. Why do we do that? Because we believe that helps us to secure our global position in the top five, will bring us to a size where we have more than 400 modern vessels with a capacity of over 3 million TEUs. That definitely will give us access to a better and broader customer base. Helps us also, in particular, in some trades, not least, Transpacific, Atlantic, and Intra- Asia. And we expect from this significant synergies in the range of up to EUR 500 million, and we know how to do that.
Of course, you'll see that mainly in network and procurement, and we expect to realize those within a few years. Important to say that this merger is subject to the approval of the general meeting of ZIM by simple majority vote, but also by the regulators, which are not only the antitrust authorities, but in this case, also a number of Israeli ministries related to the Golden Share issue that we referred to earlier. We expect the transaction to close in 2026. Maybe if we move on. Quick profile of ZIM and why do we believe that that's a good match with us, and we'll have a bit more on that on the next page, where we try to see how that fits into our strategy.
When you look at it in terms of size, a little bit over 100 ships, very modern, quite a lot of them on LNG, which also fits with what Hapag has, a capacity of a bit over 700,000 TEUs, moving close to 4 million TEUs of cargo and a very talented and good customer base, people at ZIM of close to 7,000. Publicly listed, as you know, headquartered here in Israel, number 10 globally, strong positions in a number of selected markets, and also a workforce with a very good reputation.
Of course, and on the right, on the right-hand side, you'll see the numbers, both in terms of volume and the EBITDA that is being generated in the last couple of years, and also in the first nine months of 2025, but more about that later on. We believe that this is a really good fit to our strategy. I think when you look at the strategy of Hapag, we've always said we'd like to remain a container carrier and therefore a pure play plus. I think that's where ZIM would fit in perfectly well. It also helps us on selected trades, as we mentioned already before.
Very complementary network structure would bring us into a really strong position on Transpacific, but also on Atlantic, and would help us in the Intra- Med, where I would say Hapag is a little bit too strong, sorry, too small. When you look at the fleet, very modern fleet, some clever investments and commitments done on longer-term time charters. The fact that we have a higher time charter share, once we do this transaction than we traditionally had, I think is a good thing that gives us some more flexibility, certainly because there is some uncertainty around what's happening in the markets. Not to forget, I think one of the big pluses that we have seen when we merged with CSAV and also when we merged with UASC, is that that gives us access to a broader talent base.
And I'm convinced that also, as we bring the teams from Hapag and ZIM together, we are able to build a stronger joint global team, which will also make us more competitive. And of course, also the synergies are important because EUR 500 million is still a very significant amount of money, and we know how to get that out of the system, and as such, a very important argument on why to do this transaction. A little bit more on the trade portfolio and the overall size. As you can see on the left-hand side, transportation volume of the two companies together on a pro forma basis in 2025, around 17 million.
We believe that once we close, hopefully towards the end of this year or going into 2027, that we will be able to generate over 18 million TEUs of, of cargo. In terms of size, we would remain combined number five, but certainly quite a bit closer to numbers one to four, and with a bit more distance to numbers six and seven. I mentioned already the trades, here are two examples. I think Transpacific, we would have a very strong position between the two of us. I think if you would take the market shares in the, in the latest quarters, the, the numbers would be even a little bit more favorable.
Also in Intra-Asia, we would be, it would give us line of sight to go back to the 15%-16% that we have always aspired. When we look at the fleet of ZIM, yeah, and compared to Hapag, I would say very strong in the mid-size segments, where both when you look at their 15,000s, but also when you look at the category between eight and 12, very complementary to what we have. And that would also mean that if you look at it in terms of combined and order book, at over time, that would allow us to further not only modernize our fleet, but also bring efficiency further up.
And of course, in many services, we would be able to deploy bigger ships, which, as we all know, is one of the biggest drivers and levers if you want to achieve the synergies. When you look at scale and size, I think here are the numbers for 2024 and 2025, in terms of what's being generated between the two companies in revenue, EBITDA and EBIT, yeah. I think you can see that when you look at 2025, that both companies still reported very decent earnings, both on EBITDA and EBIT. I think also, if you keep that in mind, when you look at the overall consideration that is going to be paid, that relationship is certainly not crazy. But, moving on to the next page.
When looking at synergies, we do think that the $500 million is a realistic ambition. Of course, one then also needs to look at what do we actually pay and what do we buy? When you look at the overall assets and equity that ZIM has, we are talking of something that is fairly close to $4 billion. In addition to that, we would, if you want, invest to secure those $500 million synergies. And that also means that we believe that once we look back on this transaction, hopefully in 3, 4 or 5 years, that we will be able to conclude that this was economically a very sound deal. A couple of points on the right-hand side.
I think when it is around realizing synergies, I think we've been doing that in the past. The way we look at this right now, here, is very much the same. We think that in year one, we will realize about 65% of the synergies. In year two, round about 90%, and in year three, we would be able to get to a 100%. Most of those synergies lie in the network, but of course, there are also other categories where we can, where we will, save money. Then finally, this will also mean that we will have not only initially, but also in the mid and long term, a significant presence in Israel, yeah, which we believe is, is crucial.
On the one hand, because of the market position that we will have, but also because of the capabilities they, for example, have on the technology side, which is something that where certainly the current Hapag organization could benefit from. So maybe with that, let me hand it over to Mark for a couple more comments before we take your questions later.
Yeah, good afternoon, and, thank you, Rolf. I think it's good to build on what Rolf said, that this transaction not only complement and support our trade portfolio and our vessel fleet, but adds significant scale and earnings potential. And building on that, I think it's quite important that we can build our presence in Israel, and that we are benefiting from the key skills employees of ZIM have. So therefore, it's a good starting point. When we look now at the transaction structure, let me briefly walk you through. The process is straightforward and follows Israeli and corporate law. ZIM is an Israeli company, so the entire merger will be executed under Israeli law, including the required regulatory approvals and shareholder procedures.
The merger requires, among others, I would say, the following approvals: a simple majority of votes cast at the ZIM general meeting, on the one hand side, the consent of several Israeli ministers under the terms of the Golden Share, so the approval at the end of the government of Israel, and clearance from antitrust authorities in the relevant jurisdictions. At closing, after having received all approvals, a dedicated SPV will merge with ZIM, and ZIM will become a 100% subsidiary of Hapag-Lloyd. Existing shareholders of ZIM will receive $35 per share compensation, and this ensures a clean and efficient implementation of the combination of both companies. We will work closely with all stakeholders, for sure, to ensure a smooth and for sure, timely approval journey. Jumping shortly on the next page for the Golden Share topic.
A key element of the transaction is the treatment of the so-called Golden Share, held by the Israeli state. To ensure full compliance, the transaction is structured in two coordinated streams. First, Hapag-Lloyd will acquire ZIM, and the vast majority of ZIM's global business activities will be integrated into that bigger Hapag-Lloyd, so to say. Second, FIMI Opportunity Funds will establish a new independent Israeli shipping line, which will provide Israel with broad and reliable global connectivity. FIMI is Israel's largest and most established private equity firm, founded in 1996. Headquartered in Tel Aviv, they are highly respected across both industry and the government. They manage $9 billion across 7 funds and have executed more than 100 investments, with quite a strong track record.
FIMI is known for disciplined execution, responsible ownership, and for working with regulated and strategically important companies. Overall, FIMI brings exactly the execution capabilities and local credibility needed to set up an independent Israeli-based carrier. The new company, so the new ZIM, will take over the obligations embedded in the Golden Share. The necessary assets, as well as the ZIM brand rights, will be transferred to enable full operational independence. The setup meets all Golden Share requirements. The new ZIM remains an Israeli-incorporated independent carrier with capabilities essential for the national maritime interest. FIMI and Hapag-Lloyd will enter into a slot charter agreement, securing access to our global nexus network. At the same time, it allows us to fully integrate the international ZIM business into the carrier.
Let me turn now to the financial metrics for a moment, of this transaction, especially the consideration and how we plan to fund the deal. We will offer $35 per share. The financing structure is straightforward and entirely within our existing balance sheet capabilities. The acquisition will be funded primarily from our liquidity reserve, which currently stands at roughly $7.5 billion. To provide additional headroom and flexibility, we have arranged a bridge financing facility up to, well, $2.5 billion. Post-closing, we expect limited incremental liquidity needs. Neither company faces meaningful debt maturities in the near term, so we enter the integration phase from a position of financial strength. Importantly, all vessels, vessel deliveries scheduled between 2027 and 2029 are already fully funded and financed long term.
This removes a major uncertainty and keeps our forward CapEx profile stable. Overall, the transaction is fully financiable with resources we already have in place, while maintaining a strong liquidity position and balance sheet resilience. Having said that, I hand it back to Rolf.
Yeah, I think that brings us to the end of the presentation. I think, last couple of words on how we look at closing of the transaction. I would say, the first step will be the ZIM extraordinary general meeting. That's going to take place, well, it's right now in the middle of March. And then we seek the approval from the ministries of the State of Israel, and in parallel, we'll also pursue antitrust clearance. And based on the assessment that we can make at this point in time, we hope to be able to conclude the transaction in the fourth quarter of this year or somewhere towards the end of 2026. And I think with that, we wrap up the introduction from our side, and happy to take any questions that you may have.
Ladies and gentlemen, we will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to disable the loudspeaker mode and eventually turn off the volume from the webcast while asking a question. Anyone who has a question may press star and one at this time. One moment for the first question, please. The first question comes from Alexia Dogani, from J.P. Morgan. Please go ahead.
Yeah, good, good afternoon. Thank you for taking my questions. If I start firstly with the timing of this announcement, can you kind of explain a little bit the outlook you see for the business and actually both businesses, and what gives you confidence to increase capacity and your exposure to, well, the upcoming container shipping cycle, and kind of the parameters you see on that? Secondly, obviously, you know, the outlook is up to debate and, you know, rates can have different scenarios, but at which scenario would you potentially step away from the transaction? Meaning, given the quite long lead time to closure, rates could potentially worsen and the financial performance of ZIM could potentially be a little bit worse from the trailing performance you're showing here. I guess, at what point would you reconsider?
And then finally, in terms of your Gemini partnership, what is ZIM's role into, the Gemini Alliance, and would you be looking to put ZIM's tonnage in the network? I'll leave it here, and then maybe I'll come back. Thank you.
Well, maybe let's try to take them one by one. I think, you know, when we look at the outlook of the industry, as you also pointed out already, that's always very difficult to judge. I think when we look at the last couple of years, we've actually seen much stronger growth than many people anticipated, 6.5% in 2024 and close to 5% in 2025. That actually has a, you know, that actually really helps to bring the anticipated overcapacity by many back to a relatively low number. That does not take away that we also think that there may be some quarters where, you know, where the market may be somewhat weaker after a very long period where markets have been very strong.
But when we look at the combination of Hapag-Lloyd and ZIM, we look at that more longer term. We know that both companies have performed very well over the last five, six years. And we think that combining those and then delivering also significant synergies is, you know, a really good value proposition. As I already said, that's also why we look at it, that, you know, let's look at the amount of assets we acquire, the synergies that we acquire, and then we think that the total consideration is actually very reasonable. Your second question, you know, there are no clauses in the merger agreement based on which we could step out, dependent on how market goes. At some stage, you have to take a decision. Do you believe in this case, yes or no? We believe in ZIM, yeah.
We believe in the strength of that organization, and we also believe in our combined competitive position longer term. So that's why we did this transaction. And your third question on Gemini, I think it's very likely to assume that indeed some of the tonnage that ZIM deploys on the East-West trades would also phase into Gemini, which would generate cost savings there. And we think that that's actually a good thing that will help Gemini gain a little bit of scale, that will help us to bring unit costs further down. And I think as many have seen, you know, Gemini has been a very good product in the market, so strengthening that further with an organization that is also very customer-centric, I think is a good thing.
Thank you. And if you don't mind, can I ask a couple of follow-ups as well? Just firstly on the timing, I guess I appreciate what you said. Obviously, if you look at kind of the share price of ZIM, when we had the correction in 2023, it was a much more attractive price point than what you're paying now. Did you consider it back then? And I guess, what kind of created this sense of urgency today, is it in terms of kind of access to tonnage near term? That's my first follow-up. And then my second follow-up is on the synergies. Obviously, the $300 million-$500 million look interesting, but in three years' time, obviously, the rate could have eaten up or kind of the rate decline potentially could have eaten up some of the synergies.
How do we measure your success in integration? Should we just be looking at the unit costs to see the development of that synergistic opportunity? Because obviously the earnings are much more influenced by the rate. Thank you.
Yeah. Well, maybe first thing on timing, we think that the timing is right. That also depends a bit on, you know, when is there an opportunity. Of course, since late summer last year, there was a process going on where people were looking for strategic alternatives for ZIM, and we then raised our hands because we felt we could do something with that. In terms of synergies, I think the interesting thing about a combination like this is that the one thing that, as you rightfully point out, nobody knows, is where the rates will go, but what you do know is what you can do on cost. And that's where taking out costs in a case like this actually makes the business case more resilient.
If we would look at the simulations that we did, then we see that the basic payback of this case is very good. But in cases where the market would be less good, this is also a very resilient case, because the cost savings will be there, and in addition to that, you will also still be able to cut some CapEx, that you otherwise would have to do if you have less scale. So all in all, timing is also when there is an opportunity. If you look at the value of the ZIM shares, I mean, they have been anywhere between very low and very high on the last five years.
When we look at the assets that we acquire, and when we look at the synergies and the resilient case that we actually see, especially also in the downturn, then we believe that this is a very sound case.
... As a reminder, if you would like to ask a question, please press star and one. The next question comes from Lars Heindorff from Nordea. Please go ahead.
Yes, afternoon. Thank you for taking my questions. A little bit about the fleet composition with the combined fleet. Now, how it will look, you will have roughly half of your fleet chartered in, compared to what Hapag on a standalone basis is slightly below 40%. So maybe the first question is on that part, is that a desired level that the share of chartered fleet should be? And then, secondly, on the order book, as far as I can calculate, it will stand around 21%, measured in TEU, compared to what the combined entity will operate. That's still quite a bit below where the market sits around, it's 34%, I think it is at the moment. Is that also a desired level, or do you need more there? Thank you.
Well, maybe, I think to take your first question, you are right that the TC percentage would go up to a level that's a little bit above where we would normally want to be. I think that over time, we will bring that percentage also back down again, probably closer to the 60/40 that we looked at. Having said that, as we go through a period where there's a fair bit of uncertainty, then to have a slightly higher time charter percentage can actually also be an advantage because it makes us a little bit more flexible and agile if we have to react to things that are happening in the market. In terms of order book, I would say that the 20% is actually a decent number. Yeah.
If you take into account that the order book covers these days typically 4 years, 5 years, then that is probably roughly in line with what we would need to cover the growth in the market, combined with a bit of scrapping here and there as well, as our ships also in some vessel classes are getting older.
Okay. If I may, just a few follow-ups as well. So since they have a number of VSAs with other carriers at the moment, probably most predominantly on the transpacific with MSC, the first part here is, what is the timeline for MS... Sorry, not for MSC, for ZIM stepping out of those VSAs in terms of, you know, I, you talked earlier about the speed of the synergies, and then in connection with that, the synergies that you aim to achieve, will those mainly be achieved in ZIM or in Hapag? And then last but not least, and sorry for my, maybe it's a stupid question, but I got in a bit later in the call: Will ZIM continue to operate as a separate brand under Hapag, or will it be rebranded?
Thank you. Let me take the last one first. I think you know, the ZIM brand will go to FIMI, yeah, as they will operate the new ZIM, which will take care of the golden share. So that means that the rest of the business would operate under the Hapag brand. As far as the co-operations with other carriers are concerned, and in particular also MSC, we will, once the time is ripe, we will talk to them about how we deal with that.
There are certain contractual obligations that we will, of course, live up to, but we believe, and that's also why we have a certain phasing in the realization of the synergies, why we say it's gonna be probably 65% first year, 90% in year two, and, and 100% in the, in year, in the last year. In terms of where the synergies will occur, that will be difficult to record because we will put the business together, and I think in reality, some of those synergies will be achieved, what, in what is currently Hapag, and some of those synergies will be achieved in what is currently ZIM.
Fine. Thank you.
Ladies and gentlemen, this was the last question. I would now like to turn the conference back over to Rolf Habben Jansen for any closing remarks.
Yeah, not much to add from my side. I really appreciate that you took the time to join in fairly large numbers today. We hope that the information we gave you was informative, and we thank you for your attention and wish you a good rest of the day. Thank you very much. Bye-bye.
Ladies and gentlemen, the conference is now concluded, and you may disconnect. Thank you for joining, and have a pleasant day. Goodbye.