Trudeau govt blocks sale of Canadian construction company to CPEC-linked firm

Angelo Anderson
May 25, 2018

Canada has blocked a Chinese state firm's proposed C$1.5 billion ($1.2 billion) takeover of construction company Aecon Group on national security grounds, underscoring rising wariness of Chinese firms buying up assets in Western countries.

In a statement, Aecon said they were informed that the Governor in Council has issued an order under the Investment Canada Act directing CCCC not to implement its proposed acquisition of Aecon, and "as a result, the Arrangement between Aecon and CCCI will not proceed".

After postponing approval of the deal in February to allow for a security review, on Wednesday the Minister of Innovation, Science and Economic Development Navdeep Bains said the deal would not be allowed saying that Canada is "open to worldwide investment that creates jobs and increases prosperity, but not at the expense of national security". Under the Investment Canada Act, a national security review is conducted with input from Canada's security and intelligence agencies and the Department of Public Safety.

CCCI's Beijing-based parent, CCCC, is one of the biggest engineering and construction companies in the world and is the largest contractor building China's Belt and Road Initiative across Asia through to Africa.

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

The decision comes as Canada continues to navigate sensitive talks with the US over NAFTA, and USA officials have been critical of PM Trudeau's approval of Chinese state-backed purchases of Canadian technology companies in the past.

While CCCI does have an affiliate which is listed on the Hong Kong and Shanghai stock exchanges, that affiliate, and CCCI itself are majority owned by the Chinese government.

"I had expected a terse announcement in the summer Parliamentary recess that the national security review had been completed and that cabinet had determined that the takeover could go ahead", Burton said.

In 2014, Chinese company Beida Jade Bird wanted to open a 130,000-square-foot alarm manufacturing plant in Saint-Bruno, Que. and hire dozens of employees by the end of 2015.

Clement said any purchase of a Canadian firm by a state-owned enterprise - whether it's Chinese, Russian, Saudi or from some another country - should be questioned. From drones to IoT on bridges to 3D modelling, Canadian know-how is exceptional, and CCA welcomes the government's commitment to encouraging entrepreneurialism.

To make his point, Trudeau specifically pointed to the case of Australia, where he said people suddenly realized that "a significant portion of their energy grid, for example, is owned and controlled by a government that is not their own".

The statement did not explain what specific threats to Canada's national security surfaced during the review.

On Thursday, Trudeau offered few details when asked about his government's confidential decision-making process behind the rejection of the Aecon takeover, which followed a lengthy review by Canada's security agencies.

Amsterdam-based telecommunications company VimpelCom stepped away from its June 2013 bid to acquire Globalive Wireless Management Corp. and its subsidiary, Wind Mobile, as the deal was awaiting approval from federal regulators. "Premier Horgan now has more freedom of action to increase regulatory measures for Site C to ensure worker safety and restrict the inevitable, and to me, unacceptable, environmental damage", she said.

The potential deal was worth $ 1.5 billion.

Jim Prentice, industry minister at the time, said the sale was blocked because "we don't see net benefits to Canada in this transaction".

The news was first reported by and BNN Bloomberg.

Since then, MDA has transformed into a US company and is listed on the New York Stock Exchange with a new name, Maxar Technologies.

Other reports by Iphone Fresh

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