The Canadian government has blocked a $1.5bn takeover attempt of Aecon by China Communications Construction Company International Holding Limited (CCCI), citing advice given to them by its security agencies.
CCCI and Aecon, a large provider of construction and infrastructure services across Canada, had agreed terms on a deal, before the announcement from Canadian Economic Development Minister Navdeep Bains.
Bains said in a statement: “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.
“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.”
The announcement was met with disappointment from both the Chinese and Aecon.
John M. Beck, President and Chief Executive Officer of Aecon, commented: “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.”
The move by the Trudeau administration could disrupt its attempts to boost trade with China, which has responded bluntly to announcement.
The Chinese embassy in Canada reportedly reacted by warning the decision would “seriously undermine the confidence” of investors.
Aecon will remain publicly traded on the Toronto Stock Exchange and its headquarters will continue to be in Toronto, with regional offices in Calgary and Vancouver.