By Costas Paris, Jack Pitcher and James T. Areddy

A consortium of investors led by BlackRock agreed to buy majority stakes in ports on either end of the Panama Canal, putting U.S. firms in control of two ports that President Trump raised as a security concern because of their connection to China.

The deal with Hong Kong-based CK Hutchison is worth $22.8 billion and also includes dozens of other ports around the world, the companies said Tuesday.

Trump had flagged the Panama ports as a threat even though the canal is run and controlled by Panama. His administration argued China could force the two terminals, which handled 40% of all containers that crossed the waterway last year, to restrict American-bound ships.

In recent months, Trump also threatened to take control of the canal, potentially by military force, saying the U.S. "foolishly gave it away" and was getting "ripped off."

"China is operating the Panama Canal, and we didn't give it to China," Trump said in his inaugural address, referring to the 1977 treaty that handed control of it to Panama.

American opposition to the current ownership structure centers on concerns China could use the ports for military purposes, including monitoring ship movements or possibly sabotaging the waterway. Panamanian officials, and several former U.S. military officials, have said the facilities don't represent a military threat from China or breach the canal's neutrality.

BlackRock has briefed the Trump administration and Congress on the deal, said a person familiar with the matter. The Chinese Embassy in Washington didn't immediately respond to questions.

The U.S. built the Panama Canal, which opened in 1914, and relinquished it to Panama in late 1999 under a treaty negotiated more than 20 years earlier with then-President Jimmy Carter. Trump has long said the deal was bad for the U.S. and has complained about the fees Panama charges and Chinese infrastructure built up along the waterway.

The deal appears to mark a retreat from international port operations by Hutchison, controlled by one of Asia's richest people, 96-year-old Li Ka-shing. The group, which faced pressure from officials in the U.S. and Panama to divest itself of the Panama ports, will retain its ports in Hong Kong and in mainland China while selling control of 43 ports comprising 199 berths in 23 countries.

Among those being sold are Balboa and Cristóbal on either end of the Panama Canal. Hutchison has run the ports since the host government privatized them in 1996 over U.S. opposition that went into overdrive after Trump was elected last November.

The port business is one of Hutchison's biggest assets and has long been a pride of Li's. The business traces its origins back to earliest days of Britain's rule of Hong Kong when in 1866 it became the first company registered in the colony. Li expanded it globally after his purchase of Hutchison in 1979.

A person directly involved in the deal said the company first looked at legally challenging any moves to wrest the business from Hutchison's control, but the offer from BlackRock, which was already an investor, was too good to turn down, the person said.

"It was a very elegant solution," the person said. "Li does not like leaving things lingering."

Hutchison co-managing director Frank Sixt said the company had received a number of bids and that the deal would earn Hutchison $19 billion in cash after adjusting minority interests.

Such a deal would put American investors in charge of ports from Germany to Malaysia, and partly address criticism in the U.S. that container ports have become a beachhead for Beijing. Port construction has been a prominent aspect of Beijing's Belt and Road infrastructure project, though Hutchison itself isn't a major participant in those deals the way Chinese government-owned construction companies and shippers have been.

U.S. national security concerns about China's port interests extend beyond their management to include China-supplied equipment -- such as ship-to-shore cranes that move containers -- that critics say can be used for spying because of the data they collect. Trump has singled out China-flagged shipping vessels for higher levies when they call at U.S. ports.

Hutchison operates other terminals considered geostrategically important. In Mexico, it operates the terminal at the Pacific port of Lázaro Cárdenas, which has a freight railway link to southern Texas, and another terminal in the Gulf port of Veracruz.

Hutchison's Panama Ports company has been the only firm that manages terminals on both sides of the canal: the Balboa port on the Pacific entrance to the canal and the Cristóbal terminal on the Atlantic.

Hutchison competes in Panama with other ports leased by Seattle-based SSA Marine, Taiwan-based Evergreen Marine and PSA Singapore. The Balboa port is far more valuable because it directly serves the canal's busiest route: Asia-U.S. east coast.

The Balboa port terminal also connects to the Panama Canal Railway, which transports containers for a lower cost alongside the canal. Most of Hutchison's investments have gone into the terminal in the Pacific because most of the cargo comes from Asia.

Trump sent Secretary of State Marco Rubio to Panama in early February where h e demanded free passage for U.S. Navy ships and moves to contain the Chinese presence.

Panama agreed to pull out of China's Belt and Road initiative and asked for time to find ways to allow free passage for the U.S. warships without violating the waterway's neutrality act. It also opened a probe into whether Hutchison Ports was in line with the concession terms.

Panama denies that the container terminals interfere with the management of the canal. But officials began to look closely at the contracts, according to people familiar with the situation. Among potential concessions to the U.S. that Panama considered was finding new ownership for the two port terminals at either end of the canal, these people said.

Write to Costas Paris at costas.paris@wsj.com, Jack Pitcher at jack.pitcher@wsj.com and James T. Areddy at James.Areddy@wsj.com

(END) Dow Jones Newswires

March 04, 2025 16:16 ET (21:16 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.