Report: “Intractable Impasse” in Hutchison-BlackRock-MCS Deal Due to China
A new report indicates that with negotiations dragging on for months, the sale of Hutchison’s international terminal operations to a partnership of BlackRock and MSC’s Terminal Investment Limited (TiL) may have now hit an “intractable impasse.” The Wall Street Journal, in an exclusive report, writes that China has “upped its demands,” possibly sinking a potential agreement.
Earlier reports said that China was demanding an equal share for the state-owned shipping company, COSCO, in the deal alongside BlackRock and MSC’s TiL. The WSJ report says, possibly as a bargaining chip in the broader trade talks with the United States, Chinese officials have now said COSCO must have a majority stake in the acquisition of the terminals in Panama, as well as 40 operations globally.
WSJ reports that BlackRock, which would have had majority ownership of the two terminals in Panama, and the partnership, which would have also acquired the other international terminals, “had been open to offering COSCO an equity stake.” China was demanding COSCO’s participation in the deal in exchange for its approval. Chinese officials had accused Hong Kong billionaire Li Ka-shing and his family of being unpatriotic and damaging Chinese trade interests in the proposed sale of the terminal portfolio for $22.8 billion.
The new report says China increased its demand in the ongoing negotiations. WSJ says the demand for majority control and veto rights is not acceptable to BlackRock and TiL. Similarly, a spokesperson at the White House told the newspaper it would not accept those conditions. Donald Trump has asserted that China controls the Panama Canal in violation of the U.S.-Panama treaty and threatened to take back the canal.
Panama responded to the pressure from the United States by taking steps to distance itself politically from China and recently set terms for the sale of new terminal concessions at each end of the canal. The Panama Canal Authority invited all the major terminal operators and shipping lines to bid for the terminals and expects that it will complete the bidding by January. Early reports said COSCO was expected to bid, but WSJ reports it is barred from bidding because it is a government entity.
WSJ points out that China has, in the past, moved to block other deals that it said would endanger its trade and shipping interests. In 2014, China blocked a proposed alliance between Maersk, MSC, and CMA CGM.
The Hutchison deal is encountering other problems even before the terms have been finalized. They missed the end of the lock-up period, and now the European Commission said it is investigating the situation in Barcelona. On December 9, the Commission said it would conduct an in-depth investigation of the proposed sale, citing the potential for a lack of competition in Barcelona. MSC, it points out, has significant operations in Barcelona, while Hutchison’s terminal is one of only two, with the other operated by Maersk’s APM.
“The preliminary investigation indicates that the transaction may significantly reduce competition in the market for the provision of container terminal services at the port of Barcelona and potentially lead to higher prices and lower quality of services for container liner shipping companies competing with MSC,” the Commission wrote in its statement.
The investigation will explore the potential that MSC might gain preferential treatment in Barcelona. They speculate that “Such discriminatory treatment may notably take the form of higher prices, late access to the berth, limited availability of cranes and storage space for MSC's competitors.” Competitors they write could have “limited possibility to switch to the other deep-sea container terminal” in the port of Barcelona.
The European Commission has 90 working days, until April 30, 2026, to reach its decision. However, it could all be moot if the terms of the deal cannot be agreed upon and win the approval of China and the United States.