M&A News: BlackRock Stock (BLK) Climbs Despite Threats to $22.8B Panama Ports Deal
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March Deal
According to Reuters, the July 27 deadline for exclusive talks between BlackRock, Mediterranean Shipping Company (MSC) and CK will not be met.
The proposed sale includes two ports at either end of the Panama Canal and more than 40 others around the world. BlackRock and MSC reached a preliminary agreement to buy the ports from CK back in March.
Earlier this month it was reported that China wanted state-owned shipping giant Cosco to be an equal partner and shareholder in the ports alongside BlackRock and MSC.
Indeed, 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.
The Chinese government, led by President Xi Jinping, below, has also repeatedly expressed concerns about the deal since March. This has included slamming CK for betraying the Chinese people and being 'spineless.'
Chinese Concerns
It was concerned that the deal could hit China's shipping and trade interests. Its views carry a lot of weight with the parties involved in the deal. That's because BlackRock and Hutchison have business interests in China, and MSC is one of the biggest movers of Chinese products around the world.
That's despite APAC not being a huge revenue generator for BlackRock as can be seen below.
China's objections have also come amidst a worsening trade spat with the U.S. President Trump has put a lot of political capital into ensuring that U.S. dominance over the Panama Canal is reasserted and would no doubt object to Cosco's involvement.
Ballingal Investment Advisors strategist David Blennerhassett said Trump, 'who has a handful of issues already on his plate, would be incandescent.'
Jackson Chan, global fixed income senior manager at FSMOne Hong Kong, warned: 'I think at this moment it's not very optimistic that they can directly sell the ports to the consortium,' he said.
It is understood however that missing the deadline may not be a death-knell for the deal. It is likely exclusive negotiations will be extended.
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