China Threat to Block Panama Ports Deal, 'Wants a Cosco Stake'

Beijing has said it will block the sale of more than 40 ports to a US-backed consortium if Chinese shipping company Cosco does not get a stake.

China is unhappy with a $23-billion deal between Hong Kong-based ports owner CK Hutchison and a consortium led by BlackRock and Mediterranean Shipping Company (MSC). It has demanded that Cosco must get a stake, according to report by the Wall Street Journal on Thursday, which citing unnamed sources.

Reuters could not immediately verify the WSJ report.

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CK Hutchison, MSC, BlackRock and Cosco did not immediately respond to Reuters’ requests for a comment, while the Chinese government could not be immediately reached outside office hours.

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 of the ports, the newspaper said.

Tycoon Li Ka-shing’s CK Hutchison announced in March that it would sell its 80% holding in the ports business, which encompasses 43 ports in 23 countries. The business has an enterprise value of $22.8 billion, including debt.

After much scrutiny and criticism in China, Hong Kong conglomerate CK Hutchison confirmed in May that Italian billionaire Gianluigi Aponte’s family-run MSC, one of the world’s top container shipping groups, was the main investor in a group seeking to buy the ports.

BlackRock, MSC and Hutchison all are open to Cosco taking a stake, the WSJ said.

However, the parties are not likely to reach a deal before a previously agreed on July 27 deadline for exclusive talks between BlackRock, MSC and Hutchison, the report added.

The proposed sale has also drawn the attention of US President Donald Trump, who has expressed a desire to reduce Chinese influence around the Panama Canal and termed the deal a “reclaiming” of the waterway after it was first announced.