Ports expose Li family’s global dealmaking dilemma

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By Una Galani Li Ka-shing believed in the power of combined forces, so he named his business Cheung Kong Industries after China’s Yangtze River, which aggregates numerous tributaries. The tycoon, now 96, built his plastics manufacturer into a global retail-to-telecoms conglomerate through a wave of acquisitions. Three-quarters of a century later, a battle over a waterway on the other side of the world reflects how a profound shift in geopolitics is forcing the empire of Hong Kong’s richest man into a tricky retreat.Conditions for dealmaking are less favourable for Li’s 60-year-old son Victor, who in 2018 took charge of CK Hutchison HKEX:1, the holding company for the family’s non-real estate interests. His attempt to sell the group’s overseas ports business, including two facilities at either end of the Panama Canal, to BlackRock NYSE:BLK and the Aponte family’s MSC Mediterranean Shipping Company for $23 billion exemplifies the problems he faces: the conglomerate may not be fit for the era of U.S.-China rivalry.The Hong Kong-listed company’s operation of the Panama ports faced scrutiny after U.S. President Donald Trump claimed China was running the strategically important waterway. Two-thirds of all cargo passing through the Panama Canal originates from, or is destined for, the United States. Panamanian authorities launched an audit, setting the stage to potentially strip the company of the concession.When it was announced in March, the sale appeared an elegant way for Hutchison to extract itself from controversy. Yet China’s state media, which has for years criticised the Li family for disposing of assets in mainland China and Hong Kong, accused the billionaire family of selling out Chinese overseas interests to the United States.With the deal caught between Beijing and Washington, and a July 27 deadline for exclusive negotiations between buyers and seller fast approaching, it is unclear if Hutchison can secure the approvals it needs to go ahead. Cosco Shipping is one of several Chinese state-backed companies in talks to invest in the multinational bid consortium, Bloomberg reported last month, citing sources.The Li clan, which owns 30% of Hutchison, have always bought and sold. The elder Li acquired a substantial stake in Hutchison Whampoa from HSBC in 1979, becoming the first Chinese national to take control of a British-style “Hong” trading house. Maj...

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