Panamanian President Jose Raul Mulino has accused Donald Trump of “lying” following the US leader’s claim that the United States is reclaiming the Panama Canal.
“Once again, President Trump is lying. The Panama Canal is not undergoing any recovery,” Mr. Mulino expressed on X after Mr. Trump informed US politicians that his administration would be “reclaiming” the waterway.
Mr. Trump praised a deal orchestrated by US firm BlackRock to acquire the majority of the $22.8 billion ports business owned by Hong Kong conglomerate CK Hutchison, which encompasses assets along the Panama Canal.
This agreement will grant the US consortium control over significant ports related to the Panama Canal, amidst White House efforts to remove what it claims is Chinese ownership. The substantial purchase price resulted in a more than 20% surge in CK Hutchison’s stock price.
“Just today, a major American company announced it is acquiring both ports around the Panama Canal, along with various other assets associated with it and several other canals.”
The arrangement with the BlackRock-led consortium includes 90% of Panama Ports Company, which has managed the Balboa and Cristobal ports at either end of the canal for over twenty years, as stated by CK Hutchison.
Overall, the consortium, which also includes Terminal Investment and Global Infrastructure Partners, will have control over 43 ports featuring 199 berths across 23 countries, according to the conglomerate.
Jose Raul Mulino stated that Donald Trump is “once again… lying.”
CK Hutchison’s stock finished the day up 21.9%, outpacing a 2.8% increase in Hong Kong’s broader Hang Seng Index. Its share price has now reached its highest point since August 1, 2023.
The sale pertains to CK Hutchison’s 80% stake in Hutchison Ports, valued at an equity of $14.21 billion.
However, the conglomerate will ultimately receive over $19 billion after repaying some shareholder loans.
Goldman Sachs is advising CK Hutchison on the transaction, according to two sources familiar with the matter. Goldman Sachs has declined to comment.
The total proceeds would be comparable to CK Hutchison’s entire market value in Hong Kong before today’s stock rally.
The remaining stake in Hutchison Ports is held by Singapore’s PSA International.
Last year, approximately 12,000 ships traversed the Panama Canal, which connects 1,920 ports across 170 countries. Its strategic position is crucial for the US, as over three-quarters of vessels passing through originate from or are destined for the United States.
“I want to emphasize that this transaction is entirely commercial and completely disconnected from recent political news reports regarding Panama Ports,” stated Frank Sixt, co-managing director of CK Hutchison.
The conglomerate had been awaiting a final ruling from the Panama Supreme Court on the legal status of its government contract to operate the ports after the local attorney general declared the contract “unconstitutional.”
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Rapid, competitive process
CK Hutchison, which is controlled by billionaire tycoon Li Ka-shing, has interests spanning infrastructure, retail, and telecommunications, in addition to being the largest privately owned port operator in the world.
Mr. Li has been diversifying his business beyond Hong Kong and mainland China since the 1980s, and currently, approximately 12% of CK Hutchison’s revenue originates from those regions, while the remainder comes from Europe, the rest of Asia Pacific, and Canada.
Sixt noted that the ports deal emerged from “a rapid, discrete, but competitive process” during which CK Hutchison received a multitude of bids and expressions of interest.
JP Morgan indicated in a report that while divesting the Panama business is “understandable,” the deal is still a “surprise,” considering most of CK Hutchison’s other ports are not in regions directly affected by Sino-US geopolitical tensions.
This could be perceived as “an opportunistic deal,” according to JP Morgan. “Given our understanding of CKH’s management philosophy, any deal is feasible as long as ‘the price is right.’
The brokerage stated that this deal would signify a significant shift in strategy, leaving ports contributing about 1% to the conglomerate’s earnings before interest, tax, depreciation, and amortization, down from 15%.
The contribution from infrastructure, currently the largest segment, is projected to increase to 33% from 28%.
The $19 billion expected from the sale significantly exceeds the $13 billion valuation on the port assets estimated by analysts.
“The disposal would be highly value-enhancing,” asserted analysts from Citigroup.
CK Hutchison’s net debt level was HK $138 billion in June, and the sale proceeds could potentially place the conglomerate into a net cash position, as noted by UBS analysts.
