Talks deadline for CK Hutchison US$23 billion Panama ports deal passes on Sunday
Exclusive negotiation period between CK Hutchison and consortium ended on July 27
A deadline for exclusive talks on a US$23 billion sale of global port stakes by Hong Kong tycoon Li Ka-shing’s CK Hutchison Holdings passed without a deal on Sunday, with analysts expecting complex negotiations to be extended amid intense US-China geopolitical rivalry.
The controversial transaction involved CK Hutchison selling stakes in 43 ports, including two at either end of the Panama Canal, to a consortium led by Terminal Investment Limited, an affiliate of the world’s largest container line, MSC, and American asset manager BlackRock.
The July 27 deadline was set 145 days from the company’s March 4 exchange filing that first announced the exclusive negotiation period.
Shipping and legal experts earlier told the Post that they were not optimistic the deal would be signed in its original form by Sunday, saying it could be subject to substantial changes given the political headwinds and regulatory hurdles in both Panama and mainland China.
By midnight on Sunday, Hutchison had not disclosed any information on the deal.
Amid the ongoing trade tensions, a high-level American business delegation was expected to visit Beijing this week, the Post reported exclusively. Sources said the trip would be organised by the US-China Business Council.
Lau Siu-kai, a consultant for the semi-official Chinese Association of Hong Kong and Macau Studies think tank, said that he expected the deal deadline to be extended.
“If this transaction involves the US-China rivalry and the comprehensive strategic considerations of both countries, then an extension of the negotiations is very natural,” he said.
Lau added that reports about state-owned enterprise China Cosco Shipping Corporation potentially joining the consortium were confusing but the firm was likely to be interested.
“If Cosco has some form of ownership and decision-making power in the ports’ future operations, ensuring that Chinese cargo ships and shipping companies are treated fairly and not discriminated against, then China’s key interests would be protected, and it would give the transaction a green light,” Lau said.
He warned that if China opposed the deal, it was “highly likely to be called off”.
“If Cosco successfully participates, it could indicate that this transaction is part of the overall economic and trade negotiations between China and the US,” Lau said.
“It would also mean the US understands that China attaches great importance to this deal and will not allow the CK Hutchison ports to fall entirely into American hands.”
However, if Cosco could not join or was only a minority shareholder, Lau said: “China is likely to oppose the transaction. It is estimated that CK Hutchison will not sell the ports against China’s opposition, as this would seriously harm its interests on the mainland.”
The best outcome for CK Hutchison was for the US and China to reach an agreement, Lau said, as the company “cannot afford to offend either side”.