The Delay of CK Hutchison’s Panama Port Deal
The highly anticipated deal by CK Hutchison to sell its two port operations in Panama is facing a delay. Reports from the South China Morning Post and Chinese-controlled newspapers indicate that the planned signing of definitive documentation on April 2 will not proceed as scheduled. However, it is important to note that this delay does not necessarily mean the deal is canceled.
Chinese officials have confirmed that the State Administration for Market Regulation will be conducting a review of the transaction. According to reports, the review aims to ensure fair competition in the market and safeguard public interests. Additionally, there will be a focus on identifying any potential security or antitrust violations that may arise from the deal.
On March 4, Hutchison announced principal agreements with a consortium led by BlackRock and MSC Mediterranean Shipping Company’s TiL group for the sale of its port operations. The deal, valued at $23 billion, includes the sale of an 80% interest in 43 ports across 23 countries outside China, as well as a 90% interest in the Panama company operating terminals in Balboa and Cristobal.
While fundamental terms of the transactions have been agreed upon, the signing of definitive documentation for the Panama portion was expected to take place on or before April 2. Hutchison has also entered into exclusive negotiation and non-disclosure arrangements with the BlackRock-TiL consortium.
The news of the sale has drawn concern from Chinese officials, who view it as U.S. intervention and fear potential threats to Chinese shipping and trade. Reports suggest that China has been increasing pressure on CK Hutchison, including prohibiting new deals with Li Ka-shing and his family, who control the company.
Panama, under pressure from the U.S., has announced its own review of the transaction. The country had previously moved to reevaluate its contract with Hutchison and signaled its withdrawal from China’s Belt & Road initiative.
Amidst these developments, behind-the-scenes discussions are reportedly taking place between Hutchison and government officials in Hong Kong. The company has refrained from making public statements and canceled an investor briefing following its year-end financial report.
President Trump has lauded the deal for the Panama ports, attributing its success to collaboration with BlackRock. MSC, on the other hand, has maintained a low profile, allowing BlackRock to take the spotlight in media coverage of the transaction.