The federal government has blocked the sale of Canadian construction company Aecon Group Inc. to Chinese interests, the office of Innovation Minister Navdeep Bains has confirmed.
The controversial deal between Aecon and China’s CCCC International Holding Ltd., known as CCCI, would have been worth $1.5 billion.
A government official said Ottawa blocked the sale for “national security” reasons.
The news was first reported by forexlive.com and BNN Bloomberg.
Before news emerged of the government’s decision, shares of Aecon Group rose nine cents to close Wednesday at $17.34 on the Toronto Stock Exchange.
The $1.5-billion takeover of the Canadian construction company by CCCI, a division of a Chinese state-owned company, was put on hold in February so the federal government could conduct a national security review of the deal.
Aecon said at the time it had received notice from Bains’ office indicating that the federal cabinet had ordered a continuation of the national security review under section 25.3 of the Investment Canada Act.
That section allows the government to order a review if the minister “considers that the investment could be injurious to national security “
Pushing for a review
The opposition Conservative Party had been pressing the Trudeau government for a formal national security review of the takeover.
“The Chinese company poised to take over Canadian construction giant Aecon is rampant with corruption and has just been blacklisted by Bangladesh for that very reason,” Conservative MP Tony Clement said in the House of Commons in February.
“We know Aecon has been awarded numerous sensitive Canadian government contracts, including working with our military and in the nuclear sector. When Bangladesh is sounding alarm bells, why is Canada staying silent and not calling for a full national-security review of the takeover of Aecon?”
Aecon CEO John Beck said at the time that the company offers construction and refurbishment support to clients in the nuclear industry but is not involved in sensitive military installations, nor does it own any intellectual property or sensitive proprietary technology related to nuclear energy.
The acquisition of Aecon by the Chinese firm had already cleared most of its hurdles, after receiving the approval of Aecon shareholders, court approval and clearance from Canada’s competition regulator.
The 140-year-old company has worked on several Canadian landmarks, including the CN Tower, Vancouver’s SkyTrain and the Halifax Shipyard.
CCCI is the overseas investment and financing arm of China Communications Construction Company Ltd. (CCCC), one of the world’s largest engineering and construction groups. CCCC is 64-per-cent owned by the Chinese government.
The World Bank banned CCCI from bidding on construction projects for eight years until January, 2017 due to a bid-rigging scandal in the Philippines.
The state-owned company has also been linked to the construction of artificial islands in the South China Sea, which has created high tension between China and several Asian countries.