Why ZIM Integrated Shipping Services Stock Just Popped

Source The Motley Fool

Key Points

  • An Israeli news site reports ZIM may be taken private.

  • CEO Eli Glickman may assist in making a $20-a-share offer for the Israeli shipping company.

  • Shipping magnate Rami Unger may then merge ZIM into another shipping company he owns.

  • 10 stocks we like better than Zim Integrated Shipping Services ›

Stock of ZIM Integrated Shipping Services (NYSE: ZIM), an Israeli shipping company, soared 16% through 9:40 a.m. ET Monday after Israeli local news site Calcalist reported CEO Eli Glickman is partnering with shipping magnate Rami Unger to buy all of the company's shares.

The end goal: to take ZIM private and merge it with one of Unger's other companies.

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Container ship foredeck.

Image source: Getty Images.

ZIM going private?

The article is in Hebrew, but unofficial translations on X indicate there's an offer on the table to buy up ZIM shares for $20 each -- a significant premium to the stock's $15.50 closing price Friday.

At $20 per share, a take-private transaction would value ZIM stock at roughly $2.4 billion total.

The X translations of the Calcalist story report that Unger intends to buy ZIM first, then take it private, then merge it with his company Ray Shipping in a cash-and-stock deal, potentially bringing in Greek investors to accomplish the deal.

According to data from S&P Global Market Intelligence, Ray Shipping is a private company based in London.

Is ZIM stock a buy?

Is the news true? For now it may not matter; investors are rushing to buy ZIM stock in the hope that it's worth nearly 30% more than what it cost as recently as Friday.

In the longer term, however, investors need to weigh the risk that the news may not be true, or that the acquisition deal could fall through, leaving them stuck with ZIM stock and no buyout offer. That wouldn't necessarily be a bad thing, though. ZIM stock costs only $2.2 billion, even after today's price spike.

And over the last 12 months it earned $2.4 billion.

Should you invest $1,000 in Zim Integrated Shipping Services right now?

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Zim Integrated Shipping Services. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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