The Bank says that the Panama Deal involving BlackRock and Hutchison is Completely ‘Understandable’

JPMorgan said selling the Panama terminals was “understandable” given that Hutchison’s ownership has come under scrutiny from the Trump administration amid wider US concerns about alleged Chinese government control and influence on Panama Canal operations.  But JPMorgan said the sale of Hutchison’s other terminals outside of China was a “surprise” and could be “an opportunistic deal.” “Based on our understanding of the management philosophy of CKH, any deal is possible as long as ‘the price is right,’” the bank said in a research note.

Hutchison’s $22.8 billion disposal of most of its global terminal interests to a consortium of BlackRock Group and Mediterranean Shipping Co.’s Terminal Investment Limited (TiL) is likely to trigger a wave of terminal deals as MSC divests facilities to meet regulators’ anti-trust demands.  These are expected to include terminals at Rotterdam, Le Havre, Antwerp, Hamburg and in Egypt.  The sale has also raised questions about the future of Hutchison’s port interests in China — which are not part of the BlackRock/TiL deal — and the 20% stake in Hutchison Port Holdings (HPH) held by Singapore-headquartered terminal operator PSA International.  Hutchison is not the most dynamic operator.  Its ports portfolio has been chugging along since the COVID-19 pandemic. There has been growth, but it’s been organic, mainly expanding capacity at existing terminals rather than acquiring new ports.

PANAMA CITY March 2025 – The Panama Maritime Authority, which oversees shipping and port infrastructure in the country, will request all legal and financial documents from a key transaction between CK Hutchison (0001.HK), and a consortium backed by BlackRock (BLK.N), the minister to the presidency Juan Carlos Orillac said on Friday.  U.S. BlackRock announced that a group of investors, including Global Infrastructure Partners and Terminal Investment, agreed to buy most of the port business of Hong Kong-based conglomerate CK Hutchison, including its 90% stake in Panama Ports Company, which operates the Balboa and Cristobal terminals under a 25-year concession. 

The maritime authority is expected to analyze the transaction, which gives control of the two ports strategically located near the Panama Canal to the BlackRock-backed group, at the cabinet’s request, to ensure that public interest in the terminals will be protected, Orillac added in a release.  A separate audit of CK Hutchison’s port concession, renewed in 2021, is yet to be completed by Panama’s Comptroller General Office.  The CK Hutchison-BlackRock broad deal involves the Hong-Kong firm’s 80% stake in Hutchison Ports with an equity value of $14.21 billion. However, the conglomerate will receive more than $19 billion following repayment of some shareholder loans.

Some U.S. lawmakers have said that CK Hutchison’s control of the Panama ports represents a security risk that might jeopardize the Panama Canal’s operations, backing up President Donald Trump’s threat on taking over the waterway, which was returned by the U.S. to Panama in 1999 under a neutrality treaty. The ports are not part of the canal nor needed for vessels to pass through the interoceanic way, which is mostly used by ships departing from or heading to the U.S. The Panama-owned canal is operated by an autonomous entity, while Panama’s Maritime Authority oversees the ports and Panama’s vessel registry.  “My administration will be reclaiming the Panama Canal, and we’ve already started doing it,” Trump told the U.S. Congress following the deal. 

Panamanian President Jose Raul Mulino said Trump was “once again lying” in a social media post. “The Panama Canal is not in the process of being reclaimed … the Canal is Panamanian and will continue to be Panamanian!”  The head of Panama’s business chamber Consejo Empresarial Logistico, Daniel Isaza, said the CK Hutchison-BlackRock deal might encourage the expansion of port infrastructure in Panama.  “The administration of the Balboa port opposed the construction of other ports in the Pacific and introduced multiple lawsuits that halted the construction of the Corozal port,” he said. “A new administration capable of making new investments to increase port offer is positive for the country.” 

CK Hutchison, the Hong Kong-listed parent of Hutchison Port Holdings, announced it had reached an agreement with BlackRock/TiL to sell its 80% stake in HPH, including the 90% HPH holds in the Panama Ports Company.  The deal, subject to regulatory approval, will catapult MSC into pole position as the world’s largest terminal operator with annual throughput volumes of almost 120 million TEUs based on 2023 figures, leapfrogging the three existing top operators — Singapore’s PSA, China Merchants Port Holdings and Cosco Shipping Ports.  In Europe, national governments and the European Commission will carry out regulatory reviews to assess the level of market concentration MSC will have with the takeover of Hutchison’s port assets.

In Rotterdam, MSC and Hutchison are among the largest terminal owners and operators, controlling more than 13 million TEUs of capacity. That includes MSC’s Delta Dedicated North Terminal operated under an agreement with ECT, which is 89.4% owned by Hutchison. ECT also operates the ECT Delta Terminal and holds a 60.8% stake in the Euromax Terminal, while Hutchison holds 100% of Hutchison Ports Delta II.  Euromax is likely to be among the divestment candidates. European Commission competition watchdogs are also likely to consider MSC’s dominant position in Antwerp and Hamburg when considering whether the Hutchison ports deal reduces competition at ports across Northern Europe.  The future of PSA’s stake in Hutchison is a question.

Commenting on PSA’s 20% stake in Hutchison Port Holdings, there are two possible options. The first is for PSA to cash out, selling its interest to BlackRock/TiL or other investors. Or PSA can retain its shareholding in the hope its value increases as BlackRock/TiL rejuvenates Hutchison’s ports.  PSA bought its stake for $4 billion in 2006 and made an unsuccessful attempt to dispose of its shareholding for a similar price tag in 2023 due to economic headwinds.  PSA did not respond to questions about the future of its Hutchison ports stake.  On the future of Hutchison’s port interests in China that are excluded from the BlackRock/TiL deal, there is speculation that its stakes in terminals in Shanghai and Ningbo could be wrapped into Singapore-listed HPH Trust, which controls Hutchison’s port interests in Hong Kong and South China.  An alternative option would be for Hutchison’s other shareholders — Shanghai International Port Group and Cosco Shipping Ports in Shanghai and Ningbo Port Group in Ningbo — to acquire them.

The deal will bring significant benefits for MSC because the Hutchison portfolio is largely complementary to terminals controlled by TiL and opens new opportunities such as in Australia, where MSC doesn’t have any terminals, while Hutchison has terminals in Sydney and Brisbane.  Operations in the high growth Southeast Asia and Mexican markets are seen to be particularly advantageous.  The deal could also prompt some shuffling of carriers between terminals as MSC moves operations to Hutchison terminals within ports.  Once the deal is done, which might be a year down the line, terminal operators could be worried about the business they are going to lose if or when MSC moves to Hutchison terminals.

source : newsroompanama