News / Path now clear for Cosco to join consortium to buy HPH port terminals

Hutchison's Myanmar International Terminal

The expiry of yesterday’s 145-day deadline for exclusive negotiations between Hutchison Port Holdings (HPH) and the MSC-BlackRock consortium appears to have formally paved the way for Cosco to get in on the sale.

HPH owner CK Hutchison had come under considerable pressure from Chinese authorities blindsided by the announcement on 4 March of the $22bn sale of HPH’s international terminal portfolio to the US investment fund and world’s largest shipping line.

Unable to block the sale on regulatory grounds – the terminals being outside China’s jurisdiction – Beijing ordered other sectors of the economy “to stop doing business” with CK Hutchison’s Chinese operations, which include vast property, retail and mobile phone networks.

Subsequently, the Chinese authorities demanded that state-owned liner Cosco be part of the buyer consortium as the price for approval of the sale.

A statement to the Hong Kong Stock Exchange, where CK Hutchison is listed, said: “Notwithstanding such expiry, the group remains in discussions with members of the consortium with a view to inviting major strategic investor from the PRC to join as a significant member of the consortium.

“Changes to the membership of the consortium and the structure of the transaction will be needed for the transaction to be capable of being approved by all relevant authorities.”

A port industry insider recently told The Loadstar that China’s objections to the deal largely focused around a perceived “loss of face”, particularly around the sale of HPH’s two facilities in Panama – the ownership of which Donald Trump had attacked soon after his inauguration.

“Everyone in the industry knows Hutchison didn’t control the Panama Canal just because it had the terminals – but the Chinese public doesn’t understand that; neither does Trump, presumably, and Beijing can’t look as if it is being pushed around,” he said.

The sale of Panama Ports Company, in which HPH holds a 90% stake with the Panamanian government the remainder, had been originally carved out of the overall HPH sale.