Germany's Hapag-Lloyd said on Monday it would buy Israel's ZIM Integrated Shipping Services for $4.2 billion in cash to secure its position as the world's fifth-largest shipping group, reported Reuters.

However, the deal prompted a backlash in Israel, with ZIM workers at its headquarters in Haifa going on strike and the city's mayor calling on the Israeli government to block it.

Frankfurt-listed ZIM's shares leapt 50% following Hapag-Lloyd's confirmation of the deal, which came a day after the German company said it was in advanced talks to acquire ZIM.

Hapag-Lloyd's shares fell by 8% on news of the ZIM deal, which it said would be funded through its cash reserves and external financing of up to $2.5 billion.

"The merger would secure Hapag-Lloyd's market position as the fifth-largest shipping line in the world with a modern fleet of over 400 vessels," the company said in a statement.

ZIM says on its website it has operations in more than 90 countries serving 300 ports worldwide.

In a related deal, Israeli private equity fund FIMI will acquire a business with 16 vessels carved out from ZIM that secures direct global maritime connections for Israel.

FIMI and Hapag-Lloyd did not disclose the financial terms of this nested deal, under which a "golden share", which gives Israel special ownership rights in ZIM, will be transferred to FIMI's dedicated Israeli container line, to be called 

Meanwhile ZIM management said they are in talks with the staff union to avert any negative impact and that the strike was ongoing.

Hapag-Lloyd CEO Rolf Habben Jansen told journalists he understood the concerns, but the deal was convincing.

Israel's competition authority said it would look at the takeover, which JPMorgan analysts said would allow Hapag-Lloyd to increase its global market share from 7% to just under 9% without having to boost investment in a drawn-out process.