The Canadian Government has blocked the sale of Aecon Group to CCCC International over concerns of national security.
In October, Aecon Group and China Communications Construction Company Limited (CCCC) — A Chinese state-owned company — announced they entered into an agreement under which CCCC would acquire all of the issued and outstanding common shares of Aecon for $20.37 per share in cash, equaling a value of about $1.51 billion.
The deal was set to take place through CCCI, the overseas investment arm of CCCC.
However, in February the deal was delayed by an ongoing security review by the federal Ministry of Innovation, Science and Economic Development, under the Investment Canada Act.
Today, Navdeep Bains, Minister of Innovation, Science and Economic Development, announced the deal would be blocked by the federal government. “As is always the case, we listened to the advice of our national security agencies throughout the multi-step national security review process under the Investment Canada Act,” Bains said in a statement. “Based on their findings, in order to protect national security, we ordered CCCI not to implement the proposed investment.”
John M. Beck, President and Chief Executive Officer of Aecon Group said the sale would have opened new doors for the company.
“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,” Beck said in a news release. “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.”
Aecon Group no longer for sale
Last August, Aecon Group confirmed it had asked BMO Capital Markets and TD Securities to investigate the potential of the company. The special committee formed for the sale has been dissolved and, while Aecon’s Board considers strategic options in the best interest of the company, Aecon is no longer actively pursuing a sale process.
According to the news release, Aecon remains a publicly traded company on the Toronto Stock Exchange and its headquarters remain in Toronto, with offices in Calgary and Vancouver.
“We are fortunate to have a strong market position, effective industry partnerships, and outstanding employees, all of which will help drive our future success,” Beck said.
Aecon provides construction services to private and public-sector clients in the infrastructure, energy and mining sectors and provides project management, financing and development services through its concessions segment. The company is also consistently recognized as one of the Best Employers in Canada.
Aecon’s history can be traced back to 1877, when Scottish immigrant Adam Clark started a plumbing and gas fitting business in Hamilton, Ont. Since then, Aecon has grown into one of the largest construction and infrastructure development companies in Canada.
Since its creation, Aecon has been involved in the construction of some of Canada’s most iconic landmarks, including the CN Tower, St. Lawrence Seaway, Vancouver Sky Train and the Montreal’s Trudeau International Airport.