Hong Kong-based conglomerate CK Hutchison , one of the world’s leading owners of port terminals, has decided to sell a majority stake in its port companies and terminals managed by Hutchison Ports Holding (HPH) , which highlights the marketing of its assets in Panamanian ports, amid pressure from the United States over alleged Chinese influence over the Panama Canal.
In a joint statement, CK Hutchison and BlackRock – TiL announced an agreement in principle, firstly, for the acquisition of 90% of HPH’s stake in Panama Ports Company (PPC) , operator of the Balboa and Cristóbal Colón terminals in Panama.
“The PPC Transaction will be carried out separately once the Government of Panama confirms the proposed terms for the purchase and sale,” according to the statement.
The government of Donald Trump, president of the United States, has alleged that the administration of the Panama Canal has fallen into Chinese hands , which would represent a security risk in operations.
The agreement in principle also includes the sale of CK Hutchison’s effective and controlling 80% stake in subsidiaries and associates that own, operate and develop a total of 43 ports comprising 199 berths in 23 countries , including Mexico, where it has a significant stake in the country’s main ports.
The above also brings together all management resources, operations, terminal operating systems, Information Technologies and other HPH systems, and other assets related to the control and operations of those ports.
“(The agreement) does not include any interest in the HPH Trust, which operates ports in Hong Kong, Shenzhen and southern China, or any other ports in China,” according to the press release.
The value of these transactions was estimated at 22.8 billion dollars. The negotiations would take 145 days, according to the companies.
“Pending the signing of the final documents, CK Hutchison and HPH have entered into exclusive negotiation and confidentiality agreements with the BlackRock-TiL consortium, which will have full access to the information and documentation for the purposes of conducting confirmatory due diligence,” the statement said.
“This agreement is a powerful illustration of the combined BlackRock and GIP platform and our ability to deliver differentiated investments for clients. These world-class gateways facilitate global growth. Through our deep connectivity with organizations like Hutchison and MSC/TIL and governments around the world, we are increasingly the first choice for partners seeking patient, long-term capital. We are delighted that our clients can participate in this investment,” said Larry Fink, Chairman and CEO of BlackRock.
It is worth noting that CK Hutchison is a publicly traded company and has no financial ties to the Chinese government , although Hong Kong companies are subject to state supervision.
“Our relationship with Hutchison Ports goes back a long way and is one of mutual respect and friendship. Furthermore, we are very pleased to partner with BlackRock and Global Infrastructure Partners (GIP) , with whom we share a long-standing and excellent relationship. We have great respect for the management team at Hutchison Ports and, should this transaction close, we look forward to welcoming them into our extended family. We are very focused on this industry and know that the investment in Hutchison Ports will be a very commercially viable investment,” according to Diego Aponte, President of Terminal Investment Limited (TiL) and Chairman of the MSC Group .
“This transaction is the result of a fast-paced, discreet but competitive process in which numerous offers and expressions of interest were received. As a result, the valuation of the transaction agreed in principle is compelling and the transaction is clearly in the best interest of our shareholders. After making the necessary adjustments to take into account minority interests and the repayment of certain shareholder loans owed by HPH to CK Hutchison, the transaction is expected to generate cash proceeds in excess of $19 billion for our Group. I would like to highlight that the transaction is purely commercial in nature and has no bearing on the recent political news regarding the Panama ports. It should be noted, however, that the transaction remains subject to confirmatory due diligence, settlement of definitive documentation and normal and customary closing procedures, adjustments and conditions, as well as compliance by HPH with the rights of minority shareholders under existing shareholder agreements relating to the HPH interests sold,” stated Frank Sixt, Co-Managing Director of CK Hutchison.
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