US President Donald Trump has praised a deal in which the US investment firm BlackRock is leading the purchase of most of CK Hutchison's ports business, worth $22.8 billion. This deal includes important ports near the Panama Canal.

The deal will allow a US group to take control of important ports along the Panama Canal. The White House wants these ports removed from what it considers Chinese ownership. However, this move could increase tensions between the US and Panama, especially after disputes over Trump's statements about the Canal. "My administration will be reclaiming the Panama Canal, and we've already started doing it," Trump told the US Congress on Tuesday night. "Just today, a large American company announced they are buying both ports around the Panama Canal and lots of other things having to do with the Panama Canal and a couple of other canals."

In a post on X on Wednesday morning, Panamanian President Jose Raul Mulino claimed that Trump was "once again lying." "The Panama Canal is not in the process of being reclaimed ... the Canal is Panamanian and will continue to be Panamanian!" According to CK Hutchison, the agreement with the BlackRock-led consortium includes 90% of Panama Ports Company, which has run the ports of Balboa and Cristobal at each end of the canal for more than 20 years.  A consortium, including Terminal Investment and Global Infrastructure Partners, will now oversee 43 ports with 199 berths across 23 countries, according to the conglomerate. The high selling price caused CK Hutchison’s stock to surge by over 20% on Wednesday, significantly outperforming the 2.8% increase in Hong Kong’s Hang Seng Index. This marks its highest price since August 1, 2023.

The deal involves CK Hutchison selling its 80% stake in Hutchison Ports, valued at $14.21 billion. However, the company will receive over $19 billion after repaying certain shareholder loans. Two sources familiar with the deal said that Goldman Sachs is providing advice to CK Hutchison. However, Goldman Sachs did not comment on the matter. John Waldron, the president of Goldman Sachs, was one of the senior bankers involved in the discussions because of the importance of the deal, according to a third source familiar with the talks, as reported by Reuters. Bankers from Goldman Sachs in Hong Kong were also part of the discussions, the source added. The amount of money raised would be nearly equal to CK Hutchison's total market value in Hong Kong before its stock surged on Wednesday.

The remaining part of Hutchison Ports is owned by PSA International, a company based in Singapore. Last year, about 12,000 ships passed through the Panama Canal, which connects 1,920 ports across 170 countries. The canal is crucial for the United States, as more than 75% of the ships using it either start or end their journey in the U.S. "I would like to stress that the transaction is purely commercial in nature and wholly unrelated to recent political news reports concerning the Panama Ports," CK Hutchison co-managing director Frank Sixt in a statement. Trump has often claimed that China has influence over the Panama Canal because CK Hutchison, a company based in Hong Kong, operates there.

Hong Kong was handed back to China from British rule in 1997 under a "one country, two systems" agreement, which was meant to protect its freedoms, including freedom of speech. On Thursday, Mulino clarified that Trump’s idea of the U.S. "reclaiming" the Canal was never discussed with them. During a recent visit, Secretary of State Marco Rubio or another U.S. official may have addressed the history of the Panama Canal. The U.S. controlled the canal and its surrounding area until 1977, when it signed treaties handing control and sovereignty to Panama while ensuring the Canal's permanent neutrality. These agreements officially took effect in 1999. For many Panamanians, U.S. involvement in the canal remains a sensitive issue. A major flashpoint occurred in 1964 when a confrontation with Canal authorities led to the deaths of around two dozen protesters.

After the local attorney general declared the government contract to run the ports "unconstitutional," CK Hutchison had been waiting for the Panama Supreme Court to render a final decision over the legality of the agreement.  The business empire led by billionaire Li Ka-shing operates in various sectors, including infrastructure, retail and telecommunications. It is also the largest privately owned port operator in the world. Since the 1980s, Li has been expanding his business beyond Hong Kong and mainland China.

Today, only about 12% of CK Hutchison's revenue comes from these regions, while most of its earnings come from Europe, the Asia-Pacific region, and Canada. According to Sixt, CK Hutchison got a lot of proposals and expressions of interest during "a rapid, discrete but competitive process" that led to the ports transaction. In a report, JPMorgan stated that although the sale of the Panama operation is "understandable," the deal is nevertheless a "surprise" because the majority of CK Hutchison's other ports are not located in areas where Sino-US geopolitical conflict is directly present. 

According to JPMorgan, it might be "an opportunistic deal". "Based on our understanding of the management philosophy of CKH, any deal is possible as long as 'the price is right'." The purchase would reduce ports' share of the conglomerate's profits before interest, tax, depreciation, and amortisation from 15% to around 1%, according to the brokerage, marking a substantial change in strategy. The infrastructure sector, which is currently the largest, will see its contribution increase from 28% to 33%. CK Hutchison is expected to receive $19 billion from the sale, which is significantly higher than analysts' estimated valuation of $13 billion for the port assets. "The disposal would be significantly value enhancing," Citigroup analysts said. According to UBS analysts, CK Hutchison had a net debt of HK$138 billion ($17.76 billion) as of June. The money from the sales could help the company move into a net cash position.