Shares in U.S. asset manager BlackRock (BLK) were higher today despite its $22.8 billion Panama Ports deal with CK Hutchison (CKHUF) being delayed until 2026.
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“The deal is taking much longer than we had expected when we announced in March, but frankly that’s not particularly troublesome,” CK group managing director and finance director Frank Sixt said. “There is a reasonable chance that discussions will lead to a deal that is good for all of the parties and that will be capable of being approved by all the relevant authorities.”
Complex Deal
He added: “With a deal of this size and complexity, closing… would not in any case occur this year, even if binding arrangements are agreed this year.”
According to recent reports China’s state-owned shipping giant Cosco is aiming to secure at least a 20%-30% stake in the proposed deal alongside BlackRock and Mediterranean Shipping Company (MSC).
The proposed deal includes two ports at either end of the Panama Canal and more than 40 others around the world.
BlackRock and MSC, which reached a preliminary agreement to buy the ports from Hong Kong conglomerate CK back in March, are reportedly open to Cosco taking a stake.
Last month, CKH had announced that the exclusive negotiation period with the consortium led by BlackRock and Mediterranean Shipping Company (MSC) had expired, and it intended to invite major strategic investors from mainland China to join as key members of the consortium.
Chinese officials have told BlackRock, MSC and Hutchison that if Cosco is left out of the deal, Beijing would take steps to block Hutchison’s proposed sale.
This won’t be too much of a surprise for BlackRock given that legal and regulatory hurdles are a key risk for the group – see above.
Trump Concern
A delay to the deal could be bad news for President Trump who has put a lot of political capital into ensuring that U.S. dominance over the Panama Canal is reasserted.
There is also the current trade and tariff spat between the U.S. and China, as well as wider geopolitical concerns.
The Chinese government has also repeatedly expressed concerns about the deal since March. This has included slamming CK for betraying the Chinese people and being “spineless.”
It was concerned, and presumably still is, that the deal could hit China’s shipping and trade interests.
Is BLK a Good Stock to Buy Now?
On TipRanks, BLK has a Strong Buy consensus based on 14 Buy and 1 Hold ratings. Its highest price target is $1,255. BLK stock’s consensus price target is $1,174.53, implying a 1.24% upside.
