CK Hutchison Holdings, a Hong Kong-based conglomerate controlled by billionaire Li Ka-shing, has agreed to sell a majority stake in its Panama Canal ports to a BlackRock-led consortium, after U.S. President Donald Trump raised concerns over perceived Chinese influence on the critical trade waterway.
CK Hutchison said late Tuesday it’s selling a 90% stake in its Panama Ports Co. to BlackRock and its Global Infrastructure Partners unit, as well as Terminal Investment, the port unit of Swiss billionaire Gianluigi Aponte’s shipping giant MSC. Panama Ports Co. operates the ports of Balboa and Cristobal in the pro-U.S. country, which are located at either side of the Panama Canal; Balboa is on the Pacific Ocean end and Cristobal is on the Atlantic Ocean side.
The deal also involves CK Hutchison divesting an 80% interest in Hutchison Ports, which operates 43 ports in 23 countries, the company said in a statement. The deal is worth $22.8 billion and will earn CK Hutchison cash proceeds of more than $19 billion if finalized, according to the statement. The consortium has agreed that negotiations will be on an exclusive basis for 145 days.
Shares of CK Hutchison on the Hong Kong stock exchange surged almost 22% on Wednesday, boosting its market cap to HK$180.4 billion ($23.2 billion).
CK Hutchison, whose business operations span ports, retail, infrastructure and telecommunications in about 50 countries, has in recent months been caught in political crosshairs. It started in December, when Trump threatened to reassert U.S. control over the Panama Canal, which handles about 5% of global trade annually. Trump accused Panama of charging the U.S., the canal’s biggest user, excessive rates, and claimed that the Central American country had ceded control of the waterway to China. China and Panama deny the claim.
A U.S.-Panama treaty signed in 1977 requires the Panama Canal to remain neutral after Washington handed over the American-built shipping lane to Panama in 1999.
In a joint address to Congress in Washington D.C. on Tuesday, Trump touted BlackRock’s deal to buy the two Panama Canal ports. “The Panama Canal was built by Americans for Americans, not for others. But others could use it,” said Trump. “That agreement (the 1977 treaty) has been violated very severely. We didn’t give it to China. We gave it to Panama and we’re taking it back.”
CK Hutchison co-managing director Frank Sixt said in the statement that the transaction “is purely commercial in nature and wholly unrelated to recent political news reports concerning the Panama Ports.”
CK Hutchison is the biggest port operator by market share at the Panama Canal, followed by America’s SSA Marine, Taiwan’s Evergreen and Singapore’s PSA. The Hong Kong-based conglomerate has been running the ports on both entrances of the Panama Canal for almost three decades.
In the first half of 2024, CK Hutchison generated 20% of its HK$28.8 billion earnings before interest and taxes from its ports operation, making it the company’s third-biggest business. During the same period, it earned HK$21.6 billion in revenue from ports operation, with 82% of it coming from ports outside of mainland China and Hong Kong.
“The deal will remove business uncertainty for CK Hutchison and offer an additional $19 cash proceeds for them to hunt for new M&A opportunities,” said Bloomberg Intelligence analyst Denise Wong in a note. “The company is well positioned to replenish its portfolio with assets that are less prone to geopolitical tensions.”