BlackRock Inc. led one of the biggest acquisitions of the year in a deal that marked both the firm’s expanded reach in infrastructure and a win for U.S. President Donald Trump, who had raised concerns over control of key ports near the Panama Canal.
The world’s biggest asset manager led a consortium that will buy a controlling stake in Panama ports that had become a political lightning rod and a larger unit that has operations across 23 countries. CK Hutchison, the conglomerate founded by Hong Kong billionaire Li Ka-shing, said it would receive cash proceeds of more than $19 billion from the sale.
CK Hutchinson shares jumped as much as 25% in Hong Kong on Wednesday, the most in 27 years.
The deal is a major victory for Trump, who had argued that China had taken over the critical waterway, without providing evidence, and that the U.S. was paying too much for the passage of ships. He previously demanded the fees charged on U.S. naval and merchant ships be lowered, or else Panama should return the canal to the U.S.
The agreement was reached alongside a deal in principle for BlackRock and its Global Infrastructure Partners unit, along with Mediterranean Shipping Co.’s ports division, to acquire units that hold 80% of the Hutchison Ports group, which operates 43 ports in 23 countries, the company said Tuesday in a statement. The consortium will also acquire 90% of Panama Ports Co., which operates the two entryways in Balboa and Cristobal.
The deal also removes a headache for billionaire Li. As recently as January, his company said it was committed to continue operating in the country, but has faced increased scrutiny amid Trump’s threats. Panama’s government had been weighing whether to cancel the company’s contract, Bloomberg reported last month, and had also initiated an audit.
It will also be a lucrative exit for CK Hutchison if the deal goes through. At $19 billion, the proceeds the Hong Kong conglomerate gets from the port business buyout is worth as much as CK Hutchison’s market valuation and “a total free ride for shareholders,” said Kenny Wen, head of investment strategy at KGI Asia Ltd. “Shareholders’ expectations of a special dividend or share buyback will increase significantly.”
While CK Hutchison is based in Hong Kong — a Chinese territory with its own borders, currency and legal system — Beijing has clamped down on the former British colony since 2020, when it imposed a broad national security law that paved the way for a crackdown on dissent.
Infrastructure expansion
The transaction represents the largest infrastructure deal in BlackRock’s history after it bought infrastructure specialist GIP last year in a push further into private markets. BlackRock shares fell as much as 3.4% to $933.34 in New York, slumping along with the rest of the market amid an escalating trade war.
CK Hutchinson’s American depositary receipts ended the day 17% higher.
BlackRock Chief Executive Officer Larry Fink, speaking at an RBC Capital Markets conference, said the deal was a great opportunity for the asset manager and highlighted the company’s “long relationship” with CK Hutchison.
The deal includes the bulk of CK Hutchison’s ports division, which produced 20% of the conglomerates earnings before interest and tax in the first half of last year and was the company’s third-biggest business. In its most recent results, the ports units outside of China and Hong Kong produced HK$17.8 billion ($2.3 billion) in first-half revenue and HK$6.25 billion in Ebitda. Ports across Asia, Australia, Panama, Mexico and the Middle East saw a 33% jump in profit in that period.
The company is keeping its ports in China. Meanwhile, the proceeds from the deal will boost the Hong Kong conglomerate’s war chest for its ongoing acquisition spree.
“The company is well positioned to replenish its portfolio with assets that are less prone to geopolitical tensions,” said Denise Wong, a Bloomberg Intelligence infrastructure analyst. “In fact, M&A activity across the CK Group has been picking up since last year, following a three years lull.”
‘Writing on the wall’
“Hutchison could see the writing on the wall, that strategically it was best for them as well for Panama to pursue its interests elsewhere,” said Evan Ellis, Latin America Research Professor with the U.S. Army War College.
The deal could also relieve pressure on Panama President Jose Raul Mulino, who has been attempting to ward off Trump’s designs on control of the Panama Canal, which was handed over to the local government in 1999.
“It’s positive to the extent it helps Mulino to diminish Chinese footprint in Panama and placate Trump,” said Risa Grais-Targow, director for Latin America at Eurasia Group.
The White House had no immediate comment. The Trump administration and members of the U.S. Congress were briefed on the agreement, according to a person familiar with the matter.
Panama will review the transaction, and the audit of the Panama Ports contract will continue, according to a statement posted to Mulino’s account on X.
Hutchison has run the ports in Panama’s Balboa and Cristobal under a concession that was first signed in 1997 and, in 2021, extended until 2047. The acquisition of the ports will require government sign-off, BlackRock said.
Source: American Military News
