Newspaper article The Canadian Press

Controversial Chinese Firm to Buy Aecon for $1.5B Pending Regulatory Approvals

Newspaper article The Canadian Press

Controversial Chinese Firm to Buy Aecon for $1.5B Pending Regulatory Approvals

Article excerpt

Controversial Chinese firm to buy Aecon

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TORONTO - The CEO of Aecon Group Inc. says its $1.5 billion acquisition by one of the world's largest engineering and construction groups will level the global playing field for the Canadian construction company, but regulatory approvals must be met before the takeover by the controversial Chinese firm goes through.

China Communications Construction Company Ltd. said on Thursday it has agreed to pay $20.37 per Aecon share in cash to buy Aecon, which said in August that it was looking for potential buyers.

The offer requires the approval of two-thirds of the votes cast at a special meeting of Aecon shareholders as well as government and regulatory approvals under the Investment Canada Act, the Canadian Competition Act and authorities in China.

CCCC Ltd. was barred from involvement with any World Bank construction projects for eight years until recently for fraudulent practices in the Philippines.

"We can confirm that CCCC's proposed acquisition of Aecon will be subject to review under the Investment Canada Act," said Karl Sasseville, press secretary to Innovation Minister Navdeep Bains.

"The proposed acquisition, like all significant foreign investment transactions, will be reviewed on its merits based on the overall economic benefit for Canada."

Prime Minister Justin Trudeau said on Thursday that the Aecon takeover deal "will be examined very carefully by the Investment Canada Act to ensure that safety and security is not being compromised and to ensure that it is in the net benefit of Canadians."

In terms of regulatory approvals, RBC Dominion Securities analyst Derek Spronck said he believes Aecon's only potential obstacle could be its significant nuclear work in Canada.

"We do not believe there would be any issues with a foreign buyer acquiring these assets, and if there are, we believe (Aecon) would be able to sell off the nuclear segment easily," he said.

"Bids from Chinese competitors would not be viewed too positively by Canadian regulators given (Aecon's) CANDU work, but the nuclear work could potentially be carved out during the sale process," added CIBC analysts in a separate note. …

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