M&A News: China Crisis Eases for BlackRock as $22.8B Panama Ports Deal Moves Closer
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Major Investor
CK Hutchison said today that it was considering inviting a Chinese 'major strategic investor' to join the BlackRock-led consortium negotiating the sale of its global ports business outside China, including operations at the Panama Canal.
BlackRock stock rose 0.4% in pre-market trading in the hope that this could mean the deal finally gets done. Although as can be seen below its share price has performed well recently despite the uncertainty around the deal.
The proposed sale in March to BlackRock and Mediterranean Shipping Company (MSC) includes two ports at either end of the Panama Canal and more than 40 others around the world.
However, the Chinese government has repeatedly expressed concerns about the deal. 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.
CK did not say who the investor was, but it follows a report earlier this month that China wants state-owned shipping giant Cosco to be an equal partner and shareholder in the ports or else it would block the sale.
Trump Barrier
'We remain in discussions with members of the consortium with a view to inviting a major strategic investor from China to join as a significant member of the consortium,' CK Hutchison said.
It added that changes to the consortium's membership and deal structure will be needed for the deal 'to be capable of being approved by all relevant authorities'.
It said the 'period for exclusive negotiations' mentioned in the March announcement with BlackRock and MSC had expired, but discussions will continue.
Bloomberg Intelligence analyst Denise Wong said that 'ongoing negotiations and the reported inclusion of Cosco Shipping in the consortium have likely eased concerns over Chinese regulatory hurdles, strengthening investor confidence in the deal's viability.'
However, President Trump may be one final barrier for the deal to get over. The sale was seen as a political victory for Trump, who had vowed to 'take back' the Panama Canal from alleged Chinese control.
Bringing Cosco into the deal would not sit well with Trump, especially during the tariff trade war between the U.S. and China.
Is BLK a Good Stock to Buy Now?
On TipRanks, BLK has a Strong Buy consensus based on 13 Buy and 1 Hold ratings. Its highest price target is $1,224. BLK stock's consensus price target is $1,168.79, implying a 4.05% upside.
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