Plans by a BlackRock consortium to buy dozens of ports from Hong Kong conglomerate CK Hutchison are in doubt following a demand by China’s state-owned shipping giant Cosco for a majority stake in the deal, a new report says.
Sources familiar with the takeover discussions have said BlackRock and its partner Mediterranean Shipping Company were thinking of dropping the $22.8-billion deal to buy 43 ports in Asia, the Middle East and Europe, if Cosco insists on control of the new entity, according to the FT.
Hutchison said in March it would sell the ports in 23 different countries, including two near the Panama Canal, to a consortium led by BlackRock and a subsidiary of the Swiss-Italian shipping group MSC, controlled by the Aponte family.
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The takeover was lauded by US President Donald Trump early this year, who said he wanted to take back control of the Panama Canal, but it was slammed by Beijing, which claimed the sale was a betrayal of China’s interests.
China has sought to block and rejig the takeover, insisting that it has the right to review the deal, despite the fact that none of the ports are on the mainland.
But while BlackRock and MSC were open to offering Cosco an equal stake in the takeover of 41 of the ports (excluding the two in Panama sought by the US), it later demanded a majority holding, the Wall Street Journal reported last week.
BlackRock and MSC have reportedly said the demand for majority control and veto rights in running the ports is not acceptable. And the White House allegedly agreed.
“The President has made clear that Chinese control of the Panama Canal is unacceptable, violates the US-Panama Treaty, and jeopardizes our national and economic security,” a White House official was quoted as saying.
A senior Chinese official told the WSJ that Beijing wants to make control of the ports a negotiating point in the US-China talks on trade and tariffs, as tipped by Asia Financial, and others, in July.
Meanwhile, officials in Panama reportedly have plans to sell two plots of land on either side of the canal to be developed into container ports, which might open the door to greater US ‘influence’ in the waterway, but government entities such as Cosco will be barred from bidding, the WSJ reported.
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