Li Ka-shing Escapes Trump Glare With $19 Billion

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 welcomed the news, with analysts saying CK Hutchison got a good price. Under the agreement, the company will sell 43 ports in 23 countries, while keeping facilities in mainland China and Hong Kong. The company’s shares surged as much as 25%.

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.”

Before the deal was made public, CK Hutchison’s market capitalization was HK$148 billion . 

The sale gives the company considerable firepower to pursue acquisitions in safer areas. 

The group has 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. 

The group, which is led by Li’s son Victor, counts half of its revenue from Europe and only 12% from mainland China and Hong Kong.

It’s possible CK Hutchison will hand back some of the 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 sale 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.

The sale may also ease geopolitical pressure on the firm.

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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