A delegation from three competing construction companies has reportedly urged the federal government to block the proposed $1.5-billion acquisition of Aecon Group Inc., a major domestic rival, by a state-controlled Chinese firm, the Globe and Mail reports.
The newspaper says representatives from PCL Constructors Inc., Ledcor Group and P.W. Graham & Sons Construction met earlier in the January “with senior civil servants in the federal Department of Innovation, Science and Economic Development, which must approve the Aecon takeover, according to sources who took part in the meeting.”
The competitors want the government to block the takeover on the grounds that China Communications Construction Co. Ltd. (CCCC) – which is one of the world’s largest infrastructure companies – has a poor track record for safety and corruption, and that a state-controlled Chinese entity is not suited to work on projects with security concerns, such as the refurbishment of Ontario nuclear power stations and building military facilities.
Toronto-based Aecon has built power plants and prominent projects including the CN Tower and Vancouver’s SkyTrain.
The Globe and Mail reports that the session was part of a last-ditch campaign to stop a deal that would make CCCC a significant player in a booming domestic construction market. Spokespersons for the three companies and the federal government declined to comment on the meeting.
However, an organized labor representative says he sees no problem with the takeover.
Bob Blakely, Canadian operating officer for Canada’s Building Trades Unions, said his organization supports the deal because a better capitalized Aecon means more work for the members. “As a general rule, businesses get acquired all the time by national and international firms, and, generally speaking, the result isn’t fire, famine a and plague,” he was quoted as saying.
The Globe and Mail reports that Aecon’s board of directors put the 140-year-old company up for sale in the summer, in part to find an international partner and compete for larger projects and also in response to pressure from an activist shareholder who wanted to see the stock price rise, and announced a deal with Beijing-based CCCC in October. Aecon shareholders voted overwhelmingly in favour of the takeover in December. The deal received the blessing of Canada’s competition watchdog and Chinese regulators last month.
The final regulatory hurdle — approval under the Investment Canada Act — is expected to be completed by Jan. 26, though the government can extend the deadline.
Aecon chief executive John Beck told the Globe and Mail that the sale to CCCC “will make Aecon a much stronger company that will continue to be managed by Canadians according to our existing values and with thousands of Canadian employees working in communities across the country. This is good news for our customers, employees, partners, taxpayers and other stakeholders.”