Canadian construction and infrastructure group Aecon has agreed to a CAN$1.5bn (US$1.2bn) takeover offer from China Communications Construction Company International Holding (CCCI).
If the deal is approved by regulators, Aecon would be the state-owned giant’s second western contractor acquisition, having bought Australia’s John Holland in 2015.
The offer, which values the Toronto-based company at 23% above its market capitalisation on 25 October, was accepted with enthusiasm by the Aecon board, based largely on gaining access to CCCI’s financial resources and international network.
A press release issued by the company said the deal would create "significant and immediate value for Aecon shareholders", as well as strengthening the company’s position in Canada and abroad.
Lu Jianzhong, the president of CCCI and chairman of Australian contractor John Holland, said: "This is an excellent fit for both of our companies. Aecon has a strong management team that has made it a leading construction company in Canada and a pioneer in public-private partnerships (PPP) and concession operations.
"It will now gain access to significant capital, complementary infrastructure expertise and an international network to support its growth ambitions."
Lu Jianzhong, the president of CCCI (CCCI)
Aecon is Canada’s largest public construction group and is active in four main market segments: infrastructure, energy, mining, and PPP concessions.
The acquisition will have to gain regulatory approval as it values Aecon at more than C$1bn, the threshold created by the Investment Canada Act.
To help the deal over this political hurdle, CCCI said it recognised Aecon’s importance to Canada and was committed to ensuring that the transaction would deliver benefits to Canada, including greater domestic and international competition for construction services.
It added that the company would continue to be headquartered in Canada, that its employees and brand identity would be retained, and that the company’s corporate social responsibility and its support for Canadian suppliers would continue.
Aecon, which traces its roots back to 1877, has been named one of Canada’s best employers every year since 2007 and in 2013 was named a top employer by the Globe and Mail.
CCCI is the overseas investment division of China Communications Construction Company, the fourth largest contractor in China.
Top image: Aecon was founded by Scottish immigrant Adam Clark in Hamilton, Ontario (Aecon)
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I hope there is a limit to Chinese takeovers