Prime Minister Benjamin Netanyahu told a Sunday cabinet meeting on July 5 that the proposed $4.2 billion sale of Israeli shipping company Zim Integrated Shipping Services to Germany’s Hapag-Lloyd is “not on the agenda at all,” throwing the deal into serious doubt and erasing much of the premium built into Zim’s stock. Defense Minister Israel Katz backed him, telling ministers the government still holds a “golden share” in Zim and will use its legal authority to step in if national security requires it.

The turning point came when Deputy Minister Almog Cohen raised the sale during the meeting and warned that handing control to a buyer with Gulf ownership would be a disaster. He said Israel would be giving away the key to its maritime gateway to a company under Qatari and Saudi influence. Days earlier, the Defense Ministry had formally concluded that the deal, in its current form, does not adequately protect Israel’s security interests — a position Katz adopted and disclosed to the media.

Investors reacted fast. Zim shares fell about 6.8% on Monday on the New York Stock Exchange, closing near $23.70 and pushing the company’s market value below $3 billion — well under the $4.2 billion the buyers agreed to pay. The stock now trades at a steep discount to the $35-per-share cash offer, a sign the market sees a real chance the sale never closes.

The deal was signed in February. Under its structure, Hapag-Lloyd would take over most of Zim’s international routes, including lanes between East Asia and the Americas, while Israeli private equity fund FIMI Opportunity Funds, led by Ishay Davidi, would carve out the Israeli operations into a separate company called New Zim. That smaller carrier — roughly a dozen vessels — was designed to satisfy the state’s golden-share rules, which require Zim to keep a fleet of Israeli-owned ships and maintain freight service to and from Israel.

Officials say that is exactly the problem. With few commercial land crossings and a single major international airport, Israel depends on the sea for about 90% of its imports. Critics argue that a slimmed-down New Zim, with limited reach and capacity, could not carry that load during a war or blockade, especially if foreign shipping lines stay away. A Knesset committee earlier warned that Zim vessels played a direct role during the recent conflict, moving ammunition, food and medicine when it mattered most.

The ownership of Hapag-Lloyd has drawn the sharpest objections. Among its largest shareholders are Qatar Holding, an arm of Qatar’s sovereign wealth fund with a 12.3% stake, and Saudi Arabia’s Public Investment Fund, which holds about 10.2%. The Ministry of the Economy wrote that relying on a shipping company whose major owners include states hostile to Israel during a national emergency is completely detached from strategic reality. The Defense Ministry also flagged Chile’s government, a shareholder that has grown increasingly critical of Israel, as an added concern.

Katz confirmed the government retains a golden share that lets it intervene when national security is at stake. The February agreement itself says the transaction cannot close without sign-off from Israeli regulators and the state under that special share, alongside approvals from the Israel Companies Authority and the Israel Competition Authority. That gives the government a hard stop, not merely a voice.

Opposition has been building for months. Before Netanyahu and Katz weighed in, the Economy, Agriculture and Transportation ministries, together with Israel’s Shipping and Ports Authority, had already moved to block the sale. Zim’s workers’ union and the naval officers’ union oppose it as well. Union chairman Oren Caspi called Zim the world’s ninth-largest shipping line, controlling about 40% of Israel’s import and export market, and said it is not an ordinary commercial company.

Hapag-Lloyd is not backing down. A spokesperson said the company still expects to complete the acquisition and is pursuing approvals from regulators and the government, adding that it believes it will receive them all. The German carrier has hired former IDF Chief of Staff Gabi Ashkenazi to help move the bid forward. For Hapag-Lloyd, losing Zim would be a major setback to its growth strategy.

Some parties close to the deal believe the review is being slowed on purpose to push any final decision past Israel’s November elections, leaving it to a future government. FIMI’s Davidi, who has clashed with Netanyahu politically, argues that New Zim would launch debt-free with $700 million in equity and meet every state requirement. For now, the sale sits stalled at the top of Israel’s government, and the market is pricing in the doubt.

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