After a lifetime of dealmaking, 96-year-old Hong Kong billionaire Li Ka-shing may have just pulled off one of his boldest transactions yet.
Under pressure from the Trump administration over two ports at the Panama canal controlled by CK Hutchison Holdings Ltd., Li’s company announced a plan to sell off the bulk of global ports business to a consortium led by BlackRock Inc. In return, the Hong Kong firm will receive cash proceeds of more than $19 billion.
Investors, and even some of CK Hutchison’s closest advisers, were surprised that what began with two Panamanian ports has now evolved into a much larger deal. Under the agreement, the company will sell 43 ports in 23 countries, while keeping facilities in mainland China and Hong Kong.
The group sees the sale as an opportunity to cash out at a time when global geopolitical tensions and trade barriers have weakened the outlook for the ports business, said people familiar with the matter, who asked not to be identified because of the sensitivity involved in the deal.
Investors welcomed the news, with analysts saying CK Hutchison got a good price. The company’s shares surged as much as 25%, adding almost $5 billion to its market value. Before the announcement of the deal, the stock had fallen 6.9% since the beginning of the year.
The sale “is a perfect example of turning geopolitical risks into opportunities,” said Gary Ng, senior economist at Natixis SA. “The firm has taken the chance to bundle and sell its port business at a premium, including the Panama Canal.”
CK Hutchison didn’t immediately respond to a request for comment. In an earlier statement, a spokesman for the group declined to comment beyond the public announcement, which says the transaction “is purely commercial in nature and wholly unrelated to recent political news reports concerning the Panama Ports.”
Before the deal was made public, CK Hutchison’s market capitalization was equivalent to the size of the sale at about $19 billion. That reveals “how grossly undervalued the group had been,” said Vincent Lam, chief investment officer at Hong Kong-based VL Asset Management.
“CK Hutchison is sandwiched between China and the US and is unable to please anyone,” Lam said. “Some investors may consider that this deal could help reduce political risks and release value for the group.”
Li, who began diversifying his business empire outside of China since the late 1980s when the country was enshrouded in political uncertainty, has over the next decades grown CK Hutchison into a conglomerate spanning retail, telecommunications, infrastructure and ports. It now counts half of its revenue from Europe and only 12% from mainland China and Hong Kong. Its global profile has helped the company steer through months of political unrest in Hong Kong in 2019, as well as China’s recent economic slowdown.
The ports sale highlighted how Li’s son Victor, who now led the group, has to find ways forward for the business as his father once did, at a time when the group is facing increasing geopolitical risks escalated by tensions between the US and China.
The sale gives the company considerable firepower to pursue acquisitions in safer areas. Deals have been one of the main drivers for CK Hutchison’s growth over the past decades. After a relatively quiet period during the 2019 protests in Hong Kong and the following three years of Covid closure, the group has accelerated global expansion efforts again.
It’s been looking to expand overseas in recent months, most notably in the UK. CK Infrastructure Holdings Ltd. made a preliminary £7 billion bid last month to take a majority stake in Thames Water, the Financial Times reported. CK Hutchison is also considering a bid for UK waste management firm Viridor Ltd., which could value the business at as much as £7 billion including debt, Bloomberg News reported this month.
Now led by Li’s son Victor, the company may hand back some of the port sale proceeds to shareholders in the form of a special dividend.
“We believe the company could distribute most of this windfall to shareholders,” said Dan Baker, a senior equity analyst at Morningstar. The sale “greatly exceeds our expectations.” The previous valuation for CK Hutchison’s ports business was only $10.5 billion, according to his estimates.
The deal lifted the wealth of Li, who’s now a senior advisor to the business he founded. His fortune rose $1.3 billion to $30.6 billion in the wake of the deal’s announcement, according to the Bloomberg Billionaires Index. His stakes at CK Hutchison and CK Asset Holdings Ltd. represent just over 40% of his wealth, according to the data.
While ports have for decades been one of CK Hutchison’s core businesses, bringing in recurrent, stable income, its contribution to the group’s profit has fallen behind other sectors. In the first half of 2024, ports accounted for 9% of the group’s revenue and 15% of its earnings before interest, taxes, depreciation, and amortisation.
Li’s CK Hutchison had also been facing pressure from the EU as well as the US over its ports business, according to David Blennerhassett, an analyst at Quiddity Advisors who publishes on Smartkarma.
“This is a great deal, both from a monetary standpoint and from a geopolitical one,” said Blennerhasset. “Li Ka-shing is a canny business person.”
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