A Hong Kong-based conglomerate has agreed to sell its controlling interest in a subsidiary that operates ports near the Panama Canal to a consortium led by BlackRock Inc., effectively bringing the ports under American control. This move comes after former President Donald Trump raised concerns about Chinese influence over the vital shipping lane.
CK Hutchison Holdings announced on Tuesday that it will sell its full stake in Hutchison Port Holdings and Hutchison Port Group Holdings to the consortium in a deal valued at nearly $23 billion, which includes $5 billion in debt.
The deal will give the BlackRock-led group control over 43 ports across 23 countries, including the ports of Balboa and Cristobal in Panama, along with others in Mexico, the Netherlands, Egypt, Australia, Pakistan, and more.
The transaction still requires approval from Panama’s government, and it does not include any stake in a trust that operates ports in Hong Kong, Shenzhen, or other locations in China.
The consortium purchasing the ports near the Panama Canal includes BlackRock, a global investment management firm based in New York with $11.6 trillion in assets as of December 31. Along with BlackRock, the group also includes BlackRock’s subsidiary, Global Infrastructure Partners, and Terminal Investment Limited. The deal grants them a 90% stake in Panama Ports Company, which owns and operates the ports of Balboa and Cristobal in Panama.
The Panama Canal sees around 70% of its sea traffic either leaving or arriving at U.S. ports.
The U.S. built the canal in the early 1900s to improve the movement of commercial and military ships between its east and west coasts. Control of the canal was handed over to Panama on December 31, 1999, following a treaty signed by President Jimmy Carter in 1977. Former President Trump has criticized this decision, calling it a “foolish” move to relinquish control.
Trump and some of his supporters have also raised concerns about the fees charged to ships using the canal and have claimed that China is operating it, a claim Panama’s government has denied.
In January, U.S. Senator Ted Cruz, the Republican chair of the Senate Committee on Commerce, Science, and Transportation, voiced concerns that China could potentially exploit or block passage through the Panama Canal. He also warned that the ports could serve as “ready observation posts” for China to take action. Cruz emphasized that this situation posed significant risks to U.S. national security.
In early February, U.S. Secretary of State Marco Rubio visited Panama and urged President José Raúl Mulino to reduce Chinese influence over the canal, warning that failure to do so could lead to potential retaliation from the United States. Mulino, however, rejected any claims that China had control over canal operations.
Following Rubio’s visit, Panama withdrew from China’s Belt and Road Initiative, a move that drew criticism from Beijing.
While much attention had been focused on President Trump’s threat to retake control of the canal, his administration also targeted Hutchison Ports, the Hong Kong-based consortium that manages key ports at both ends of the canal.
Hutchison Ports had recently been granted a 25-year no-bid extension to operate the ports, but an audit of that extension was already in progress. Many believed this audit could be a preliminary step toward reopening the contract for bids. Recently, there were rumors suggesting that a U.S. firm with close ties to the White House might be poised to take over the operations.
Frank Sixt, co-managing director of CK Hutchison, stated that the deal resulted from a quick, discreet, but competitive process in which several bids and expressions of interest were received.
He emphasized that the transaction was purely commercial and unrelated to recent political discussions regarding the Panama Ports.
BlackRock declined to comment further beyond a press release announcing the deal. Following the news, BlackRock’s shares dropped by 2.1% during Tuesday’s afternoon trading.