Trump’s Claims of Reclaiming the Panama Canal Amid BlackRock Acquisition

U.S. President Donald Trump supports BlackRock’s acquisition of CK Hutchison’s ports business, including key Panama Canal locations, claiming it as a reclaiming effort. Panamanian President Mulino disputes this assertion. The deal, valued at $22.8 billion, enhances U.S. control over critical maritime assets while raising questions about geopolitical tensions.

U.S. President Donald Trump has praised a significant transaction led by BlackRock, which involves purchasing most of CK Hutchison’s $22.8 billion ports business, including crucial assets adjacent to the Panama Canal. This acquisition enables the U.S. consortium to gain control of pivotal Canal ports amid discussions by the White House regarding the removal of the current Chinese ownership. Trump announced to Congress, “My administration will be reclaiming the Panama Canal, and we’ve already started doing it.”

Panamanian President Jose Raul Mulino refuted Trump’s claims on social media, stating, “The Panama Canal is not in the process of being reclaimed … the Canal is Panamanian and will continue to be Panamanian!” The BlackRock-led consortium will acquire 90 percent of Panama Ports Company, which manages the Balboa and Cristobal ports. In total, this consortium will supervise 43 ports across 23 countries, according to CK Hutchison.

The sale, notably, surged CK Hutchison’s stock by over 20 percent following the announcement, with the company’s share price achieving its highest since August 1, 2023. The deal revolves around CK Hutchison’s 80 percent stake in Hutchison Ports with an equity value of $14.21 billion, although the conglomerate will collect over $19 billion after repaying certain shareholder loans. Goldman Sachs is advising CK Hutchison on this significant deal.

John Waldron of Goldman Sachs participated in the negotiations, given the transaction’s high-profile nature, involving both U.S. and Hong Kong bankers. Remarkably, the proceeds from this sale are comparable to CK Hutchison’s total market value prior to the stock surge. Presently, the other portion of Hutchison Ports belongs to Singapore’s PSA International.

The Panama Canal serves as a strategic route, having facilitated approximately 12,000 ship passages in the past year, vital for U.S. commerce as over three-quarters of vessels utilize it for transactions involving the U.S. CK Hutchison’s co-managing director, Frank Sixt, emphasized that the commercial nature of this transaction is entirely disconnected from any political narratives concerning Panama ports.

Trump’s declarations regarding the Canal being under Chinese authority have garnered attention, especially as CK Hutchison is based in Hong Kong, which returned to Chinese sovereignty in 1997 while retaining certain freedoms. Notably, Mulino remarked that the issue of “reclaiming” the Canal was not discussed during recent talks with U.S. officials. Historically, the U.S. maintained control over the Canal until treaties signed in 1977 surrendered authority to Panama, effective from 1999.

CK Hutchison has been awaiting a final ruling from the Panama Supreme Court regarding the legality of its port operation contract, which the local attorney general deemed “unconstitutional.” The company, controlled by billionaire Li Ka-shing, operates vast interests across various sectors, yet only 12 percent of its revenue originates from Hong Kong and China. Sixt stated that the ports deal resulted from a “rapid, discrete but competitive process.”

Analysts expressed surprise at the sale of the Panama business, given CK Hutchison’s other interests elsewhere. JPMorgan noted this could be an “opportunistic deal,” while Citigroup mentioned that the transaction would substantially enhance the company’s value. Following the sale, CK Hutchison’s financial position could significantly improve, potentially shifting from a net debt scenario to a cash-positive one as they navigate through changing market dynamics.

In summary, President Trump’s announcement regarding the BlackRock-led acquisition of Panama Canal assets has ignited discussions surrounding U.S. interests in this strategic zone, countered by Panamanian President Mulino’s vehement denial of any claims of reclaiming the Canal. The transaction itself marks a substantial shift in CK Hutchison’s operations, promising significant financial benefits and increasing control over critical maritime routes. The implications of this deal may not only reshape CK Hutchison’s corporate structure but could also influence the broader U.S.-Panama relations moving forward.

Original Source: www.business-standard.com