Hutchison to sell its control of Panama Ports Company to BlackRock/MSC
One of the largest ever ports deals has been agreed whereby a consortium of US asset management firm BlackRock and Geneva-based MSC Group will acquire Hong Kong-based port operating giant Hutchison’s 90% interest in Panama Ports Company (PPC) as well as its controlling holdings in other non-Chinese terminal operations - including the UK's Port of Felixstowe.
The unexpected move comes after President Trump’s recent lambasting of alleged Chinese control over the Panama Canal, followed by the Panamanian authorities’ decision to audit the activities of PPC, which owns and operates the ports of Balboa and Cristobal located at either end of the Panama Canal. However, seller CK Hutchison denies any linkage to political events and says the deal is purely commercial in motive.
The transaction has been agreed in principle for a sum of USD 22.8bn and will proceed on confirmation by the Government of Panama of the proposed terms of the purchase and sale. The BlackRock subsidiary involved is infrastructure investment company Global Infrastructure Partners (GIP) while MSC’s is its port operating arm Terminal Investment Limited (TIL).
BlackRock Chairman and CEO Larry Fink said: “This agreement is a powerful illustration of BlackRock and GIP’s combined platform and our ability to deliver differentiated investments for clients. These world-class ports facilitate global growth. Through our deep connectivity to organisations like Hutchison and MSC/TIL and governments around the world, we are increasingly the first call for partners seeking patient, long-term capital. We are thrilled our clients can participate in this investment.”
GIP Chairman and CEO Bayo Ogunlesi said: “We are delighted to partner with Terminal Investment Limited and MSC, with whom we have a longstanding and productive relationship, to make an offer for certain interests in ports owned and operated by Hutchison Ports Holdings. Given GIP’s substantial expertise in owning and operating ports, together with our partners, we can focus on our joint ambition for these assets to continue to be world-class ports operators which are competitive, efficient, commercial and service-focused.”
Diego Aponte, Chairman of TiL and President of the MSC Group, said: “Our relationship with Hutchison Ports goes back a long way and is a relationship of mutual respect and friendship. Furthermore, we are very pleased to partner with BlackRock and Global Infrastructure Partners (GIP), with whom we share a longstanding and terrific relationship. We have a very high regard toward the Hutchison Ports management team, and if this transaction closes, we look forward to welcoming them into our larger family. We are very focused on this industry, and we know that the investment in Hutchison Ports will be a very viable investment commercially.”
CK Hutchison, Co-Managing Director Mr. Frank Sixt said: “This Transaction is the result of a rapid, discrete but competitive process in which numerous bids and expressions of interest were received. As a result, the Transaction valuation agreed in principle is compelling, and the Transaction is clearly in the best interest of our shareholders.
“After adjusting for minority interests and repayment of certain shareholder loans due from HPH to CK Hutchison, the Transaction would be expected to deliver cash proceeds in excess of US$19 Billion to our Group. I would like to stress that the Transaction is purely commercial in nature and wholly unrelated to recent political news reports concerning the Panama Ports.”