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article imageTrudeau blocks takeover of Aecon Group by Chinese company

By Karen Graham     May 23, 2018 in Politics
Ottawa - The Canadian government has blocked a proposed takeover of construction firm Aecon Group Inc. by a Chinese company - the latest such move by Western nations weighing national security concerns associated with Chinese investment.
Prime Minister Justin Trudeau's government announced its decision on Wednesday after launching a full security review in February. A spokesman for Economic Development Minister Navdeep Bains has confirmed the government's decision to prevent state-owned CCCC International Holding Ltd. from acquiring the construction firm, Aecon Group Ltd.
“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 obtained by Bloomberg News.
“Based on their findings, in order to protect national security, we ordered CCCI not to implement the proposed investment. Canada is open to international investment that creates jobs and increases prosperity, but not at the expense of national security,” Bains added in the statement.
Since the proposed deal was announced in October last year, Shares of Aecon have declined over fears the C$1.5 billion takeover would be blocked. Shares of Aecon ended trading on Wednesday at C$17.34, up 0.5 percent, and the day before traded at the lowest level since the deal was announced. CCCC had agreed to pay C$20.37 a share to acquire the construction firm.
Aecon has a long history of construction projects in Canada, including the iconic Toronto CN Tower, and Vancouver's SkyTrain, the St. Lawrence Seaway, and the Halifax shipyard, among others, according to CTV News Canada.
Clear evidence of national security issues
There has been a lot of speculation over whether the deal would go through, with many people thinking Trudeau - who is seeking warmer ties with the Chinese government - would push for its approval. However, the federal government listened to its national security agencies who had reviewed the deal and "had information that was not publicly available," according to Bloomberg.
Anita Anand, a professor of law at the University of Toronto who holds J.R. Kimber Chair in Investor Protection and Corporate Governance, said in an interview before the announcement today that Aecon's construction work also included work in sensitive fields such as telecommunications, nuclear power and military housing and training facilities. She had recommended the deal be stopped.
“There is clear evidence that there are national security issues at play in this transaction,” she said in an earlier interview. If the government sees “reasonable grounds to believe there’s a potential injury to national security, then it should intervene.”
China Communications Construction Group (CCCG), a state-owned enterprise, is the beneficial owner of CCCC and holds 63.8 percent of the company's shares. Other shareholders include multiple affiliates of (or funds managed by) Merrill Lynch, BlackRock, and JPMorgan Chase, based on the China Communications Construction Co. Ltd. Annual Report 2016. p. 57.
More about Aecon Group Inc, National security, Trudeau, CCCC International Holding Ltd, telecommunications networks
 
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