Zim's Newlog Unit in Merger Talks With UTi and Transclal

The merger, if completed, would create the biggest maritime logistics and forwarding company in Israel

Tal Levy
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Tal Levy

Zim Integrated Shipping Services said on Sunday that its unit Newlog had begun talks to merge with Transclal Trade (TASE: TRSC), and U.S. ocean freight and logistics firm UTi Worldwide (UTIW).

Zim did not provide further details, and did not advise the Tel Aviv Stock Exchange although its parent company is the publicly traded The Israel Corporation (TASE: ILCO). It settled for a press release.

Transclal, on the other hand, did advise the TASE of its talks with UTi, in which Zim has now become a party.

Transclal is a customs broker and international freight forwarder, while UTi serves as an agent of Newlog.

Zim said that even if the merger did not materialize, UTi would remain as Newlog's agent.

If the merger is pulled off, it will create the biggest maritime logistics and forwarding company in Israel.

According to a non-binding memo, Transclal would be valued at about $40 million for the purposes of the deal, if one is made. At present its market cap on the TASE is NIS 171 million, or about $39 million. From the year's start, Transclal shares have risen by 35%.

The man with the majority interest in Transclal is Mordechai Friedman, who recently increased his holdings in the company. He bought a 40% controlling interest in the company together with the Polar Investments (TASE: PLR) group back in 2002, from businessman Gad Zeevi. At the end of 2004, he bought out Polar's interest.

Since the deal with Polar, Transclal shares have tripled in value, and since the deal with Zeevi, its value has multiplied sixfold and more.

Since 2004, Friedman has received NIS 44 million in dividends.

For the first quarter of 2006 Transclal reported revenues of NIS 24.5 million and profit of NIS 6.4 million, compared with NIS 4.6 million in the same period of 2005.

For the year 2005 it posted NIS 19.5 million profit.

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