BlackRock to buy Panama Canal ports after pressure from Donald Trump

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BlackRock has agreed to buy two major ports on the Panama Canal from their Hong Kong-based owner as part of a $22.8bn deal, following pressure from Donald Trump over alleged Chinese influence at the vital waterway.

Under the agreement, the ports’ Hong Kong-based owner CK Hutchison would sell the business to a consortium including BlackRock, Global Infrastructure Partners and Terminal Investment Limited, according to a company statement on Tuesday. The group would acquire a 90 per cent stake in the company that owns and operates the two ports in Panama.

Trump has frequently alleged that “China is running the Panama Canal”, and rattled Panama when he threatened earlier this year to “take it back” under American control. The Trump administration has also demanded Panama reduce Chinese influence at the canal, claiming Beijing’s involvement in the ports had violated a treaty concerning its neutrality.

The deal announced on Tuesday also includes an 80 per cent stake of CK Hutchison’s ports subsidiaries, which run 43 ports in 23 countries, including in the UK and Germany. It also runs ports in south-east Asia, the Middle East, Mexico and Australia.

The remaining 20 per cent stake is held by port operator PSA, which is owned by Temasek, the Singapore sovereign wealth fund.

CK Hutchison said it expected to receive cash in excess of $19bn from the deal, a figure that includes repayment of some shareholder loans. CK Hutchison’s market capitalisation is HK$148bn ($19bn).

The group’s share price surged 22 per cent in morning trading in Hong Kong on Wednesday.

Trump’s election victory in November and his calls for the US to retake control of the canal prompted CK Hutchison to consider the sale, sparking a short and intense period of negotiations for the ports, according to people briefed on the discussions.

“When President Trump won and he started making noise about annexing Canada and Greenland and Panama, the pressure was put on the Panamanians,” one person familiar with the deal said. The person added that CK Hutchison “realised that it was a political headache and they wanted to do something”.

To navigate the potential political fallout, BlackRock chief executive Larry Fink briefed senior leaders in the Trump administration, including the president, to secure their backing for the takeover, two people briefed on the matter said. One of the people added that the consortium would not have gone forward with its bid if they believed the US government would not support the deal.

Controlled by Hong Kong’s richest man Li Ka-shing and his family, CK Hutchison has a portfolio of ports, retail, telecoms and other infrastructure. Ports operations made up about 9 per cent of CK Hutchison’s total revenue of HK$461.6bn in 2023.

The canal has become a flashpoint in Trump’s first weeks back in office, as he looks to expand the US’s borders and take control of infrastructure assets — roiling allies and countries that had profited from decades of growing free trade.

The deal with BlackRock comes after the asset manager’s acquisition of GIP, which helped make it a force in infrastructure investing.

The strategically important waterway is run by the Panama Canal Authority, an arm of Panama’s government. It was built by American engineers and run by the US from its opening in 1914 until a treaty in 1977 agreed a staged handover to Panama, which was completed in 1999.

Hutchison Ports, one of the world’s biggest operators of container terminals, has managed the ports at either end of the canal since 1997 under concessions from Panama’s government.

The facilities have often attracted political comment from US politicians who have alleged that CK Hutchison’s role means China in effect controls the canal.

The facilities mainly operate as “trans-shipment” ports where containers are moved between ships transiting the canal and smaller “feeder” ships shuttling to destinations around the Caribbean and the Pacific coast of South and Central America.

CK Hutchison arranged a new concession in 2021 to keep operating the ports for another 25 years.

Additional reporting by Robert Wright in London