Under strong pressure from US President Donald Trump, Hong Kong firm Hutchison announced Tuesday that it has agreed to transfer its stake in the operation of the Panama Canal and other port facilities to a US consortium. CK Hutchison Holdings will sell 90% of its shares in Panama Ports Company (PPC) and another series of ports to a group led by asset management giant BlackRock for $19 billion, according to a joint statement.
Hutchison owns and operates the ports of Balboa and Cristobal at the Pacific and Atlantic ends of the interoceanic canal. The sale of PPC “will be carried out separately once the government of Panama confirms the proposed terms for the sale,” the statement said.
Since taking office on January 20, Trump has denounced alleged Chinese control over the Panama Canal. The Republican president even threatened to retake control of the interoceanic waterway, which caused protests in the Central American country. In a joint press release with the buyers, Hutchison noted that the agreement was motivated by business, not politics.
“I would like to highlight that the transaction is purely commercial in nature and is not related at all to recent political news about Panama’s ports,” said CK Hutchison Holdings co-CEO Frank Sixt. “This transaction is the result of a fast, discreet but competitive process in which numerous offers and expressions of interest were received,” said Sixt, who described the chosen agreement as “clearly in the best interest of shareholders.”
BlackRock CEO Larry Fink said the transaction demonstrated his firm’s ability to “deliver differentiated investments for clients,” according to the press release. “These world-class ports facilitate global growth,” Fink said.
Audit continues
The announcement consists of transactions between the parties, one related to PPC and the other with various Hutchison stakes in 43 ports comprising 199 berths in 23 countries. Completion of the agreement with PPC requires confirmation from the Panamanian government, the parties said.
The Panamanian government said in a statement that this sale “is a global transaction, between private companies, motivated by mutual interests,” which, however, will not interrupt “until its completion” an audit being carried out by the Comptroller’s Office on the subsidiary that operates both ports.
In February, US Secretary of State Marco Rubio visited Panama during his first trip abroad as Secretary of State, proof of the canal’s importance to the new administration. Rubio obtained a commitment from Panamanian President José Raúl Mulino to exit the Belt and Road Initiative, China’s flagship infrastructure construction program.
Rubio also pushed for the free passage of US ships through the Panama Canal, after telling Panamanian officials it was unfair for the United States to be in a position to defend the vital waterway and also pay for its use. The waterway, built by the United States and inaugurated in 1914, was handed over to Panama 25 years ago after the signing of bilateral treaties.
Since 2000, the Panama Canal Authority, an autonomous state entity that manages the canal independently of the government, has successfully modernized the more than century-old waterways and locks to allow the passage of increasingly larger ships. Five percent of global maritime trade passes through this route.
