BlackRock Overpays for Panama Ports — But It’s Not About the Money

TL;DR

1. From $100B to Survival Mode: Walgreens Goes Private

2. Ontario Cancels Starlink in Retaliation for Tariffs

3. BlackRock Pays a Hefty Premium for Panama Canal Ports

4. Apple’s Latest Updates Flop

Prescription for Trouble: Private Equity Steps in as Walgreens Flatlines

Walgreens is nearing a $10 billion take-private deal with Sycamore Partners, ending its 98-year public market run. 

The once–$100 billion drugstore giant has been in freefall, struggling with shrinking profits, regulatory scrutiny, and a retail model that no longer works. 

The company still operates around 8,500 stores, but only 1 in 4 is profitable. As more customers order everyday essentials online, Walgreens has lost a key revenue stream: impulse purchases like snacks and makeup, which carry 15% higher margins than prescriptions. 

• Meanwhile, locking up merchandise to deter theft has only made shopping more frustrating. “When you lock things up … you don’t sell as many of them,” CEO Tim Wentworth admitted.

Competitor CVS has attempted to diversify with insurance and pharmacy benefits, but even it isn’t immune to retail’s decline — reporting a 45% drop in net income in 2024. For Walgreens, going private could offer a chance to restructure away from Wall Street’s scrutiny.

The move here? Let bad leases expire and try to stabilize the business. If Sycamore plays this right, it could actually come out ahead.

This is the PE playbook — lever up, maximize upside, and if it fails, declare bankruptcy. Bondholders price in this possibility and seize assets if things go south. If that happens, the equity capital gets wiped out too — a risk that creates urgency and efficiency. Debt sharpens focus. 

I’m not one of those people who thinks PE ruins everything. Plenty of entrepreneurs have made money selling to them, and they tend to incentivize management well. On the other hand, venture capitalists, with a few exceptions, are mendacious f*cks who pretend to care and then wash the founders out. Speaking for a friend.

Ontario Cancels Starlink Contract as Tensions Heat Up

Ontario pulled the plug on a $100 million contract with Starlink, citing newly imposed U.S. tariffs on Canadian imports. Ontario Premier Doug Ford didn’t stop there: He’s now threatening a 25% surcharge (or an outright shutdown) on the electricity Ontario supplies to the U.S. if the tariffs aren’t lifted by April.

• For Starlink, the cancellation is a rounding error. Its revenue doubled from $4 billion in 2023 to $8 billion in 2024. 

The bigger picture? Canada and Mexico are Starlink’s largest markets outside the U.S. Trump’s divisive rhetoric and trade war could seriously threaten Starlink’s explosive growth.

This is just the beginning of a domino effect. The numbers don’t lie: Only 30% of Canadians now see the U.S. as an ally, while 56% of Americans still think of Canada as a friend. 

Ford’s move isn’t just about Starlink; it’s a sign that Canadian leaders are willing to take a stand against Trump’s economic policies. If other provinces follow suit, we could see a wave of Canadian contracts and investments pulled from U.S. companies. Musk has spent years making himself a political lightning rod. Now, his businesses might start paying the price.

U.S. Tightens Grip on the Panama Canal as BlackRock Buys Key Ports

A BlackRock-led investment consortium struck a $23 billion deal with Hong Kong–based CK Hutchison to buy 43 ports in 23 countries, including two key ports located on either end of the Panama Canal. 

The deal effectively puts the ports under American control and hands a victory to President Trump, who had previously raised alarms about what he saw as Chinese interference with the operations of the critical shipping lane. The deal still requires approval from Panama, which controls the canal.

• Analysts at Citigroup valued the ports just shy of $13 billion, meaning BlackRock paid a 76% premium. 

• CK Hutchison, which had a market cap of less than $20 billion before the deal, jumped 25% on the news, while BlackRock shares rose 1%.

The Panama Canal is a critical American trade route: Roughly 70% of its traffic is going to or from the U.S. It’s also a cash machine for Panama: Last year, the canal generated almost $3.5 billion in net income from $5 billion in toll revenue. 

Why was BlackRock down to pay an almost 80% premium? Because of what it does to BlackRock’s relationship with Trump. Trump wanted to regain control of the Panama Canal, and this deal makes him look great: a major win for the government, entirely funded by BlackRock. It’s also a strategic victory for BlackRock. Once the face of ESG and DEI (policies the Republicans hated), it just flipped the script. For a few billion dollars, it recast its relationship with Trump and secured a powerful new ally.

The most valuable companies in the world are essentially tollbooths. If you want access to half of the U.S. e-commerce market, you pay a toll to Amazon. If you want to reach consumers online, there are two tollbooths: Meta and Google. So I love this idea of BlackRock capitalizing on an analog toll.

Apple Has a Growth Problem

Apple just unveiled its latest product lineup … and the biggest changes? Smoother multitasking, better video calls, and slightly cheaper prices. Investors weren’t impressed: Apple stock fell more than 2% after the announcement.

• Even Apple’s AI rollout has been underwhelming. Only 42% of iPhone users with the latest model have even tried Apple Intelligence, and 73% of them found it useless. 

The reality is that Apple is a mature smartphone company. The iPhone accounts for 51% of revenue and is one of the most valuable franchises ever created. Everything else is a side project. But growth has stalled: Hardware revenue dipped 1% last year, and while services grew 13%, they’re still only a fourth of total sales. 

Apple execs have responded to the lack of innovation by ramping up R&D spending to 8% of revenue. So far, the additional expenditure has produced a failed car project, a flopped VR headset, and incremental product updates.

The big question: If Apple isn’t a growth stock anymore, does it deserve a growth valuation? It trades at 38x earnings, the same as Amazon, despite Amazon growing nearly 6x faster. Among the Magnificent Seven, Apple now looks most like Tesla — a low-growth company with an inflated, brand-driven valuation.

Apple missed a massive opportunity with Project Titan. If it had launched its car now, it would be perfectly positioned against Tesla. Apple’s brand power alone — paired with a Range Rover–style design via Tata or Hyundai — could have derisked manufacturing while delivering a high-margin piece of software posing as a car. Beyond the product, it would have justified Apple’s lofty valuation.

Apple is the gold standard of self-expressive brands. Anything that’s over 50 or 60 points of margin usually does one of three things: It either makes a company much more productive, it makes you feel closer to God, or more attractive to mates. An Apple car would have been the ultimate “I’m rich and creative” flex. They’re probably kicking themselves for not going the distance.

I’m selling down my U.S. growth stocks and shifting to Europe.  Europe has been left for dead, but it shouldn’t be. It has top universities, hardworking talent, and a growing innovation ecosystem. U.S. tech will keep winning, but it’s just too damn expensive.

We’re becoming dopa monsters, as constant access to information rewires our brains. Scott talks with Dr. Anna Lembke, professor of psychiatry and medical director at Stanford University School of Medicine, chief of the Stanford Addiction Medicine Dual Diagnosis Clinic, and author of The New York Times Best Seller Dopamine Nation: Finding Balance in the Age of Indulgence, about the rise of addiction in the digital age — from drugs, to porn, to gambling, to social media. Listen here.

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