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The consortium behind a planned $23bn ports deal has held talks with China’s antitrust regulator, as it seeks to navigate tensions between Washington and Beijing over the Panama Canal.
Representatives of the Swiss-Italian shipping company MSC and US asset manager BlackRock held in-person discussions with the State Administration for Market Regulation (SAMR) in recent weeks, according to people briefed on the matter.
The meeting occurred ahead of a required formal submission by the consortium for official review of a deal made with Hong Kong’s CK Hutchison, which includes the takeover of two Panamanian ports. It came as the parties explored ways to ensure Chinese regulators approved the controversial transaction, the people said.
One of the individuals told the Financial Times that MSC and BlackRock were still discussing possible amendments to the final deal structure with CK Hutchison, which they hoped would satisfy both Chinese officials and the administration of President Donald Trump.
In March, the Hong Kong conglomerate announced it would offload its 43 non-Chinese ports to a consortium led by port operator Terminal Investment Limited, majority-owned by MSC, and BlackRock’s infrastructure unit GIP. The latter would take a controlling stake in the two Panama ports that had become a bone of contention after the US president accused China of “running the Panama Canal”.
Beijing has since expressed its opposition to the deal and threatened to investigate, citing concerns about competition. With a chill cast over the sale, CK is understood to be looking for a “Plan B”, including exploring a sale of some or all of its remaining 10 ports in greater China. This would be separate from the existing proposed deal, but consideration of this option is only in its early stages, according to three people familiar with the deliberations and proposals.
Chinese state-owned entities are potential buyers of the China ports, but any sale was unlikely to happen until after the TiL-BlackRock deal was complete, one of the people said.
But a CK spokesperson said it was “not considering any such sale at this time . . . the rumour . . . is untrue”. It is unclear whether such a move would make the sale of CK’s Panama and western ports more palatable to Beijing.
CK could also opt to delay the sale of the Panama ports, according to a person close to the deal. This has been the most controversial aspect of the transaction, given Trump’s threat to “take back” the Panama Canal and his allegation of Chinese influence in the vital trade chokepoint.
At CK’s annual meeting in May, management was tight-lipped about any progress. The group would “never do anything illegal or non-compliant”, Dominic Lai, group co-managing director, told shareholders.
Another option would be to bring in other investors, with Chinese state-owned conglomerate Cosco or Dubai-based logistics company DP World often mentioned in market speculation as potential additions or replacements.
A Cosco senior executive said they would not rule out any option that “meets the strategic needs of our company . . . and our future development plans”, when asked if it was interested in CK’s global ports back in March.
DP World and BlackRock declined to comment. CK also declined to comment on the possibility of bringing in other investors or delaying just the sale of the Panama ports.
CK Hutchison Holdings’ share price in Hong Kong shot up 33 per cent in the two days following the announcement of a transaction that promised a $19bn cash boost. It has since fallen to trade roughly 15 per cent higher than the day preceding the announcement, suggesting investors are split on whether the deal will go through.
China’s views represent a formidable obstacle. The SAMR announced its intention to carry out a review in March “to protect fair competition in the market”, while a Beijing-backed newspaper savaged the deal as one that “sells out the Chinese people”.
“If the Chinese Government won’t allow for a splitting of the deal then a deal would seem quite unlikely,” said Dan Baker, a senior equity analyst at Morningstar.
CK has also been facing increasing scrutiny from Panama’s government, including an audit of its contract to operate the two ports. Its 25-year concession was only renewed in 2021.
CK and the consortium would not be “going to move forward on Panama before the politics resolve themselves”, said a person involved in the proposed transaction.
“You may be in a situation where you close [the 41 ports sale for] the rest of the world, and Panama is still pending.” But there was still “good progress” being made, the person insisted.
Additional reporting by Eric Platt in New York and Chloe Cornish in Dubai
