ZIM’S proposed merger with Hapag-Lloyd has suffered a blow as Israeli ministers reportedly came out in opposition to the deal.

The German line said it would buy Zim in a deal valued at $4.2bn earlier this year.

Yet the merger has been thrown into doubt following a statement by the Israeli Ministry of Defense, which said the deal did not provide sufficient safeguards for the country’s security interests, according to multiple Israeli press reports.

Prime Minister Benjamin Netanyahu said the proposed sale of the Israeli shipping company is “not on the agenda”, according to Ynet. Netanyahu was reported to have made the comment in a cabinet meeting after Deputy Minister Almog Cohen warned the sale constitutes a strategic threat due to Qatari and Saudi stakes in potential buyer Hapag-Lloyd, the news website reported.

Defense Minister Israel Katz adopted defence ministry officials’ recommendation to oppose the proposed transaction, according to a statement from the ministry. The officials said the transaction in its proposed format does not adequately protect Israel’s security interests.

Following those comments, Zim shares tumbled nearly 6.5% on July 6.

In response, Zim said it would continue “to act in accordance with the agreement and in ongoing collaboration with the relevant state authorities as part of the regulatory review process”.

Were the merger to go ahead, the combination would cement Hapag-Lloyd’s position as the world’s fifth‑largest container line, with a fleet of more than 400 vessels, of some 3m teu capacity, widening the gap between the German carrier and the sixth-biggest carrier Ocean Network Express, with 2.1m teu. Annual volumes would also exceed 18m teu.

It’s a scenario new Zim chief executive Chen Lichtenstein will have to navigate in his first week in the job, having taken his post on July 1, following an announcement made on June 1.