Trudeau Blocks Chinese Takeover of Aecon on Security Grounds
posted on
May 23, 2018 06:16PM
NI 43-101 Update (September 2012): 11.1 Mt @ 1.68% Ni, 0.87% Cu, 0.89 gpt Pt and 3.09 gpt Pd and 0.18 gpt Au (Proven & Probable Reserves) / 8.9 Mt @ 1.10% Ni, 1.14% Cu, 1.16 gpt Pt and 3.49 gpt Pd and 0.30 gpt Au (Inferred Resource)
Looks like an all Canadian ring development with Aecon's association with the Matawa...from 2013.....
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An Aecon Group Inc. hard hat at a construction site in Toronto.
Photographer: Cole Burston/BloombergThe Canadian government has blocked a proposed takeover of construction firm Aecon Group Inc. by a unit of China Communications Construction Company Ltd. -- the latest such move by Western nations weighing national security concerns associated with Chinese investment.
Prime Minister Justin Trudeau’s government announced its decision Wednesday after launching a security review earlier this year, according to a statement from Canadian Innovation Minister Navdeep Bains obtained by Bloomberg News. A representative from Toronto-based Aecon was not immediately available for comment.
U.S. President Donald Trump earlier this year blocked Broadcom Ltd.’s hostile takeover of Qualcomm Inc. because it could “impair the national security of the United States.” Trump has killed several foreign deals involving China since taking office. His administration continues to spar with China over trade. Nor is it the first Canada has put restrictions on Chinese investments.
“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. “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.
Shares of Aecon, which helped build Toronto’s iconic CN Tower, have declined in recent weeks to the lowest since the C$1.19 billion ($930 million) deal was announced in October on concern that it would be blocked. Aecon’s construction work includes several sectors that could impact national security, including building out the nation’s telecommunications networks.
The shares ended trading Wednesday at C$17.34, up 0.5 percent, and a day earlier traded at the lowest level since the day the deal was announced. CCCC International Holding Ltd. had agreed to pay C$20.37 a share to acquire the construction firm.
There was widespread speculation in Canada that the deal might be approved as Trudeau sought warmer ties with China. A person familiar with the file, speaking on condition they not be identified Wednesday, said the government did its due diligence and ultimately followed the advice of Canadian national security agencies who had reviewed the deal and had information that was not publicly available.
Aecon’s project portfolio includes work in sensitive fields such as telecommunications, nuclear power and military housing and training facilities, 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 decision was announced. She had called for it to be blocked.
“There is clear evidence that there are national security issues at play in this transaction,” she said in an earlier interview. If government sees “reasonable grounds to believe there’s a potential injury to national security, then it should intervene.”
The move comes at a critical point for the future of the country’s trade relationships. Canada is considering launching trade talks with China as it seeks to become less reliant on the U.S. market. It is also haggling with the U.S. and Mexico over how to update the North American Free Trade Agreement.
Chinese acquisitions in Canada’s economy have cooled since 2012, when the previous Conservative government imposed limits on investment by state-owned enterprises in the energy sector.
In 2009, national security considerations were formally adding as a consideration under Canada’s foreign investment review process. The Canadian Security Intelligence Service warned in 2012 that some foreign state-owned enterprises may represent a threat to national security.
— With assistance by Scott Deveau