Canada halts Aecon takeover by China

Blocked Aecon $1.2bn takeover by Chinese firm can’t happen

Nor did the Liberal government object to the takeover of Montreal-based ITF Technologies, which specializes in making sensitive military laser technology.

"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 the statement. "Based on their findings, in order to protect national security, we ordered CCCI not to implement the proposed investment".

A months-long national security review by Canada's intelligence agencies examined CCCI's record around the world and its other, similar transactions and found there was seller's remorse in other jurisdictions, the source said.

Concerns over the proposed takeover centred on Aecon's role as Canada's largest builder of telecommunications networks, as well as the company's alleged access to information that could compromise national security if it fell into the wrong hands.

CCCC is primarily engaged in the design and construction of transportation infrastructure, dredging and heavy machinery manufacturing, according to its corporate website.

Chinese ambassador to Canada Lu Shaye has said that China would accept a rejection of the Aecon deal, but would expect from Canada a detailed rationale for the decision. CCCC Ltd has been involved in several projects, including at Gwadar as part of the China-Pakistan Economic Corridor, and in building artificial islands in the South China Sea. Aecon provides integrated turnkey services to private and public-sector clients in the Infrastructure and Industrial sectors, and provides project management, financing and development services through its Concessions segment.

Shares of Aecon, which helped build Toronto's iconic CN Tower, declined in recent weeks to the lowest since the deal was announced in October on concern that it would be blocked.

An internal federal document prepared last fall described CCCC as one of the world's largest engineering and construction firms. 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.

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"These is no doubt that the decision made by the Canadian government is by no means a good news for the investment co-operation between China and Canada", said a statement released by the Chinese embassy in Ottawa.

The stock market was already pricing in a certain degree of deal uncertainty before the announcement, with the company's share price on Wednesday about 15 per cent below CCCC International Holding Ltd.'s offer price of $20.37 per share, said financial analyst Frederic Bastien of investment firm Raymond James.

Beck said that while the sale of Aecon is now dead, his company has "secured numerous large-scale projects" and has "a significant pipeline of opportunities ahead of it". She had called for it to be blocked.

The deal underwent a preliminary security screening, but then the federal government chose to waive a further review and approve the deal.

The move comes at a critical point for the future of the country's trade relationships.

Prime Minister Justin Trudeau visited China in December, but left without a formal commitment to moving free trade talks past the exploratory phase into formal negotiations. If the government sees "reasonable grounds to believe there's a potential injury to national security, then it should intervene".

Experts had warned the Liberal government to proceed with caution when considering any investment bids by Chinese state firms and to be as transparent as possible in reviewing the proposed deal.

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