Israel Corporation Offers to Buy State's Share of Zim Cargo Lines

The Israel Corp., which holds 48.9 percent in Zim Israel Navigation Company, has offered the committee in charge of the privatization of this government corporation to buy the state's 48.6 percent share.

At this stage no financials have been discussed, since the Ofer brothers, who control the Israel Corp., first have to get the government's permission to even submit a bid.

The government decided more than 10 years ago that the cargo line should be privatized. In the last year and a half the government has been trying to find a buyer, with no success.

Zim is the ninth largest shipping company in the world, with a good reputation. The main grievance of potential bidders was the extremely favorable terms offered to the Ofer brothers. However, the Ofer brothers were not allowed to bid for the government's shares themselves.

Last week a new agreement was entered by the two main shareholders. The government was given more weight in the decision-making process and the Israel Corp. gave up the right of first refusal and the right to tag along should the state find a buyer in the future. However, the Israel Corp. is free to revert to the old arrangement any time.

The Israel Corp. was also given permission in principle to bid for the government's holding, which it is trying to exercise now.

During the period when the government was looking for a buyer, Zim was unable to make any major decisions. Now the parties have agreed to invest $200 million in new vessels.