Federal government blocks Aecon sale to Chinese company
A proposed sale of one of Canada's largest general contracting companies to a Chinese firm has been blocked by the federal government, which stated that such a sale might infringe upon national security.
Navdeep Bains, Minister of Innovation, Science and Economic Developent, said the government had thoroughly reviewed the proposal that would have seen Aecon Group Inc. acquired by China Communications Construction Company International Holding Limited (CCCI) for $1.5 billion.
"In accordance with the Investment Canada Act, the Government of Canada reviewed the proposed acquisition of Aecon by CCCI. As is always the case, we listened to the advice of our national security agencies throughout the multi-step national security review process," Bains stated. "Based on their findings, in order to protect national security, we ordered CCCI not to implement the proposed investment. Our government is open to international investment that creates jobs and increases prosperity, but not at the expense of national security."
As CCCI is owned by the Chinese government itself, concerns were raised regarding Aecon's participation in large projects such as power plants and other infrastructure; some analysts were worried about foreign entities gaining too much information regarding projects vital to Canada's national security.
"While we are disappointed with the government's decision, Aecon is and will continue to be a leading player in the Canadian construction and infrastructure market," said John M. Beck, President and Chief Executive Officer, Aecon Group in a statement issued after the government decision was released. "Through our proposed transaction with CCCI we had outlined a vision in which Aecon would be better able to compete with the many large global construction companies actively working in Canada. The deal offered considerable benefits to Aecon and its various stakeholders. While we have been prevented from pursuing the transaction, we are moving forward from a position of strength. Over the past several months Aecon has secured numerous large-scale projects, has a record backlog, and a significant pipeline of opportunities ahead of it."
MP Tony Clement, the Conservative critic for public services and procurement, said in a Twitter post that he was pleased to see the federal government take action on the issues presented. He also suggested that there may be other deals to rethink.
"The Aecon decision begs the question about other Chinese State Owned Enterprises flying under the radar and purchasing strategic assets below the automatic review trigger. A comprehensive review should occur immediately," Clement stated.
Aecon noted in its statement that there is no longer a plan to pursue a sale at this time.
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