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China’s state-owned shipping conglomerate Cosco is seeking a stake of at least 20-30 per cent in a $23bn ports deal that involves key assets in the Panama Canal, as Beijing tries to rewrite the terms of a sale that was hailed by US President Donald Trump.
The Chinese group is demanding a large stake after an exclusive negotiating window for BlackRock and Swiss-Italian shipping group MSC expired, according to two people familiar with the talks.
The two companies were originally set to form a consortium to buy 43 ports, including two in Panama, from Hong Kong billionaire Li Ka-shing’s CK Hutchison.
Under one of the options being discussed, Cosco would receive a stake in 41 ports but not the two Panama ports that Trump has alleged are subject to Chinese influence, said the people.
Trump had praised the deal in March as “reclaiming the Panama Canal” and boasted that a “large American company” would acquire the Panama ports and many others. BlackRock chief executive Larry Fink personally briefed the president and secretary of state Marco Rubio on the takeover.
But the sale triggered alarm in Beijing, where authorities blasted it as a threat to China’s “national interests” and insisted it undergo the country’s merger review process even though no mainland assets were involved.
The objections led to the consortium’s negotiating window expiring on July 27 without a conclusion. CK Hutchison said shortly afterwards in an exchange filing that talks with the consortium would continue, but a “major” Chinese investor would be invited to join as a “significant” member.
“Changes to the membership of the consortium and the structure of the transaction . . . will be needed for the transaction to be capable of being approved by all relevant authorities,” said CK Hutchison.
Two people familiar with Beijing’s view said Cosco was the only Chinese company permitted to be involved in the talks, giving it immense negotiating power over BlackRock and MSC because they would need a Chinese partner to get approval from the State Administration for Market Regulation.
The initial deal terms would have given BlackRock a controlling stake in the two Panama ports, while Aponte family-controlled MSC would hold majority ownership of the rest of CK Hutchison’s non-Chinese ports, including those in Europe, south-east Asia and the Middle East.
But BlackRock emerged as a liability after Beijing attacked the deal, said two people familiar with the talks.
Other companies are circling as well. French shipping group CMA CGM has publicly expressed interest in participating, though a person familiar with the talks said no other shipping groups apart from Cosco were in discussions to join the consortium.
Any new bidder is likely to need Cosco on its side. “It has become all about how to make Cosco happy,” said one of the people familiar with Beijing’s view.
BlackRock declined to comment. China’s foreign ministry, the State Council Information Office, CK Hutchison, Cosco and MSC did not respond to requests for comment.
