National security review delays Aecon deal

aecon group china acquisition

A national security review of the proposed Aecon sale to CCCI has delayed the $1.5 billion deal.

Last year, Aecon Group and CCCC International announced they entered into a definitive agreement under which CCCI will acquire all of the issued and outstanding common shares of Aecon for $20.37 per share in cash, representing an enterprise value of $1.51 billion.

On Feb. 12, Aecon announced the “outside date” for its purchase by CCCI has been extended to March 31.

The extension follows a notice from the Minister of Innovation, Science and Economic Development indicating the federal cabinet has ordered a continuation of the national security review of the proposed acquisition. The review of the proposed transaction under the Investment Canada Act is ongoing.

The outside date was originally Feb. 23.  However, either party may, except in certain circumstances, extend the date in increments of at least 35 days for up to 140 days, if the required regulatory approvals have not been obtained.

“There are a number of important issues to consider with this transaction,” Aecon CEO John Beck, said in a statement. “We fully support the Government of Canada processes, as established under the Investment Canada Act and the Competition Act. Over the last several months, Aecon and CCCI have been answering a number of valid and important questions about all aspects of our business and the Canadian market.

Previously, the Commissioner of Competition issued a “no action” letter in respect of the proposed acquisition. As well, about 99.4 per cent of the votes cast by Aecon shareholders were in favour of the arrangement. The Ontario Superior Court of Justice has approved the Plan of Arrangement, and CCCI has received approval from the National Development and Reform Commission.

Completion of the acquisition remains subject only to approval under the Investment Canada Act and other customary closing conditions. The deal is now expected to be finalized by July 13.

CCCI is the overseas investment and financing arm and a wholly-owned subsidiary of China Communications Construction Company Limited (CCCC), one of the world’s largest engineering and construction groups. Its core business activities include infrastructure construction, infrastructure design and dredging.