BlackRock agrees to buy ports on both sides of the Panama Canal

A consortium of investors led by BlackRock has agreed to purchase majority stakes in ports on both sides of the Panama Canal from Hong Kong-based CK Hutchison for $22.8 billion, the companies announced on Tuesday.

The transaction would place these strategically important ports under the ownership of the U.S. company.

The Wall Street Journal (WSJ), citing a source close to the matter, reported that BlackRock has informed the Trump administration and Congress about the deal.

The U.S. media outlet further reported that BlackRock, along with its new infrastructure arm Global Infrastructure Partners and Geneva-based Terminal Investment, has agreed to acquire a 90% stake in Panama Ports, which is owned by the CK Hutchinson conglomerate. The company owns and operates the Balboa and Cristobal ports in Panama.

Under the agreement, the consortium will also acquire CK Hutchison's controlling stake in 43 additional ports across 23 different countries, according to the WSJ.

It is important to note that while Panama controls the Panama Canal, the ports on both sides of the canal are owned by foreign entities.

The purchase will ease the Trump administration's concerns

Upon assuming the presidency, Trump stated that while the United States did not hand over control of the Panama Canal to China, it is, in fact, China that is operating it. He raised concerns that this could pose a threat to the U.S., as Beijing could potentially use the ports for military purposes, such as monitoring the movement of ships.

BlackRock's purchase will help alleviate the Trump administration's concerns on this matter.

The Panama Canal, built by the United States and inaugurated in 1914, was ceded to Panama in 1999 following a treaty negotiated 20 years earlier by then-President Jimmy Carter. Trump has repeatedly criticized that agreement, not only because of the Chinese presence but also due to the tariffs imposed by the Central American country.

CK Hutchison claims that it is only a "commercial" transaction

Frank Sixt, co-managing director of CK Hutchison, stated that the transaction is "commercial" and unrelated to the political discussions surrounding the Panama Canal.

BlackRock acquired Global Infrastructure Partners (GIP) last year, as CEO Larry Fink believed that private infrastructure assets would drive the next wave of growth. GIP operates energy, transportation, waste management, and water businesses globally, including London Gatwick Airport, U.S. pipelines, and data centers, according to the WSJ.

The deal with CK Hutchison marks the largest infrastructure acquisition in history for both BlackRock and GIP.