More cold water was poured on BlackRock’s (BLK) $22.8 billion Panama Ports deal with CK Hutchison today after Panamanian authorities accused the Hong Kong-based conglomerate of tax evasion and unpaid fees.
Deal Could be Sunk
According to a report in the Wall Street Journal, Panama’s top auditor Anel Flores has claimed that the Hutchison unit that operates the two Panamanian ports being sold to BlackRock didn’t get the necessary clearances when extending its 25-year contract with the Panama Maritime Authority in 2021. He said the company used tax-exempt subcontractors to cut the amount it pays the Panama government and failed to share 10% of its profits with the government.
This means that CK reportedly owes the Panama government around $1.3 billion.
Flores said he planned to file criminal charges with the attorney general and brief the Panama Maritime Authority, which oversees the ports and has the power to terminate the concessions. The legal process could take up to a year and potentially sink the deal.
BlackRock stock however powered 3% higher in pre-market trading.
A Challenging Deal
The in-principle agreement saw 43 ports owned by CK Hutchison, including two at either end of the Panama Canal, being sold to a consortium including BlackRock. The asset manager would buy a 90% interest in the Panama Ports Company alongside Global Infrastructure Partners and container terminal group Terminal Investment. Panama Ports owns and operates the ports of Balboa and Cristobal within Panama.
The move was heavily supported by President Donald Trump, who believes that there is too much Chinese influence in the operations of the Panama Canal.
However, the deal has also attracted intense criticism from China over competition concerns and even a suggestion that it has betrayed the Chinese people. China’s antitrust officials have said they would review the acquisition and it is understood that the Chinese government is lining up alternative buyers should the deal fall through.
A definitive agreement on the deal was not signed by the expected date of April 2.
Is BLK a Good Stock to Buy Now?
On TipRanks, BLK has a Strong Buy consensus based on 13 Buy and 2 Hold ratings. Its highest price target is $1,275. BLK stock’s consensus price target is $1,141.71 implying an 39.66% upside.
