The recent announcement regarding CK Hutchison Holdings' $23 billion sale of its port assets near the Panama Canal has stirred significant debate within the business community. While this deal is not finalized, analysts believe it is free from the necessity for approval by Chinese or Hong Kong regulators, placing the decision squarely in the hands of the Li family, led by Hong Kong billionaire Li Ka-shing.
Despite the potential for controversy, industry experts assert that the sale is not yet complete, primarily due to outstanding conditions that must be met. However, they emphasize that there are no significant barriers to completion, provided that CK Hutchison chooses to move forward with the transaction. According to analysts, the deal's structure allows it to bypass the scrutiny of regulators in China and Hong Kong.
Recent criticism from Chinese officials has added a layer of complexity to the situation. On Thursday, Beijing's top office for Hong Kong affairs published a scathing article via the pro-China newspaper Ta Kung Pao, branding the sale a "grovelling" act and accusing CK Hutchison of "betrayal." This strong rhetoric puts pressure on the company to reconsider its divestment strategy.
The potential sale, revealed on March 4, involves CK Hutchison selling an 80 percent stake in Hutchison Port Group to a consortium led by BlackRock. The assets in question consist of 43 container ports spanning 23 countries, including a significant 90 percent stake in two vital ports in Panama. These ports have previously attracted criticism from US President Donald Trump, further complicating the political landscape surrounding the transaction.
According to Zerlina Zeng and Zoey Zhou from the debt-research firm CreditSights, the deal is "complex and large," with ongoing confirmatory due diligence and regulatory approvals required from the locations of the ports being sold. However, they note that since the disposal targets lie outside of China and Hong Kong, the deal does not require the approval of Chinese regulators, apart from adhering to the listing rules set forth by the Hong Kong Exchanges and Clearing.
In conclusion, while the $23 billion sale of CK Hutchison's port assets presents an exciting opportunity, the mounting political pressure and the intricacies of international business dealings must be carefully navigated. The coming weeks will be crucial in determining whether this deal will proceed as planned.
