Between a Rock and a Hard Place is where Panama Port Buyers Find Themselves

The consortium seeking to finalize a $23 billion deal to acquire dozens of ports from Hong Kong-based port operator CK Hutchison has reportedly held in-person discussions with China’s antitrust regulator in recent weeks as the transaction remains in limbo. According to a report from the Financial Times, the talks came as Mediterranean Shipping Company (MSC) and BlackRock are exploring options to ensure China’s State Administration for Market Regulation (SAMR) approves the acquisition in some form. The report indicates that the parties are discussing amendments that they hoped would satisfy the respective presidents of the U.S. and China-Donald Trump and Xi Jinping-amid their ongoing trade war.
CK Hutchison supposedly has mulled a sale of some or all of its remaining 10 ports in China, separate from the existing deal. The report said that transaction was unlikely to occur until the MSC-BlackRock deal was complete. When the initial deal was first announced, all eyes were on the transfer of two ports on opposite sides of the Panama Canal from CK Hutchison to the BlackRock-MSC consortium. Hutchison can still opt to delay the Panama port sale. That part of the transaction came after weeks of rhetoric from Trump, who had repeatedly cited he wanted to “take back” the Panama Canal. Concerns over Chinese influence over the waterway were a central sticking point in Trump’s threats, with Washington considering Hutchison’s ownership of the canal-adjacent Balboa and Cristobal ports a threat to U.S. national security.
In the March announcement, CK Hutchison co-managing director Frank Sixt insisted that the acquisition of subsidiary Panama Ports Company, which operates the Balboa and Cristobal ports, was “purely commercial in nature and wholly unrelated to recent political news reports.” But China’s reaction to Hutchison’s sale to a U.S.-headquartered asset management giant and the world’s largest container shipping company suggested otherwise. National state media had gone on record to post their gripes with the deal, calling it “spineless kneeling” and “profit-seeking.” Additionally, reports had indicated that President Xi was angered over the transaction since Hutchison did not ask for approval of the deal in advance.
Although the transaction was initially expected to be signed on April 2, the date went by without the ports changing hands. That portion of the deal would have shifted control of 43 global ports over to the consortium, with the two Panama ports handed over on a separate deadline. The Panamanian government also needs to approve the second part of the agreement. SAMR said after the sale’s reported postponement that it would vet the deal. After an April report indicated that MSC’s founding Aponte family had considered separating the Panama ports from the deal altogether, the regulator publicly warned CK Hutchison against a split as a means to circumvent antitrust review.
Separating the Panama ports would ultimately require the parties to reach a new agreement. The BlackRock-MSC consortium and Hutchison are still under a 145-day exclusive negotiating window that lasts until late July. During CK Hutchison’s annual meeting on May 22, the company put out a statement in rebuttal to SAMR, saying “it is absolutely impossible for this transaction to take place in any unlawful or non-compliant circumstances.” At the meeting, Hutchison co-managing director Dominic Lai confirmed that MSC would be the main investor in the ports acquisition, and that his own firm would cooperate with Chinese authorities.
Lai said during the meeting that the deal is subject to multiple reviews by different authorities, and reiterated the company’s position that the group won’t proceed with the sale until it obtains all necessary approvals. The Financial Times report said Hutchison could potentially bring in other investors or participants to amend the deal, including terminal operator DP World and Chinese ocean carrier Cosco Shipping. It remains unclear what roles either would have in a potential deal or possible agreement. While so much focus of the deal has been widened based on interests of the U.S. and China, Panama has had its own scrutiny of CK Hutchison and its prior agreement to run the canal-adjacent ports.
Following the conclusion of a three-month audit, Panama’s comptroller general said the Hong Kong conglomerate owed the country’s government $300 million based on a contract breach. Hutchison subsidiary Panama Ports Company has denied the allegations. Others in Panama’s government have been critical of Hutchison’s operation of the two ports, with attorney general Luis Carlos Gómez finding in March that the 25-year contract extension signed in 2021 was unconstitutional. Panama’s Supreme Court has yet to rule on the finding.
Story by Glenn Taylor