The Chinese takeover of Aecon — the company overseeing the construction of Bermuda’s new airport terminal — is being delayed after the Canadian Government ordered a full national security review of the deal.
State-owned CCCC International Holding Ltd wants to buy Toronto-based Aecon for $1.5 billion in a deal approved by the Canadian construction company’s shareholders in December last year.
Aecon said last October on the announcement of the deal that the takeover would make no difference to the airport project, nor the guarantee in place from the Canadian Commercial Corporation, and that the new terminal will be completed in 2020, as planned.
Yesterday Aecon’s shares fell 1.8 per cent on the Toronto Stock Exchange after the extended national security review was revealed.
Aecon said the planned date for completing the takeover plan with CCCCI had been pushed back to March 30 from the original date of February 23.
“Both companies remain committed to working with the Investment Review Division to obtain approval of the transaction,” Aecon said.
Aecon said it had received notice from the Canadian Government 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”.
CCCI has attracted controversy before. The World Bank banned the firm from bidding on construction projects for eight years until January 2017 due to a bid-rigging scandal in the Philippines.
Chris Murray, of AltaCorp Capital, believes Ottawa’s primary concern may be Aecon’s telecom infrastructure group, which builds significant core communications networks for several major Canadian carriers.
“While we remain positive about the closure of the transaction, we are cognizant that at this juncture, this is now a political process, which adds layers of complexity and uncertainty,” Mr Murray wrote in a report.
And he added that he believes the transaction may be a “bargaining chip in Canada-China” trade discussions.
Federal Innovation Minister Navdeep Bains ordered the review on the recommendation of Canadian security agencies.
Mr Bains’ press secretary, Karl Sasseville, told the Globe and Mail newspaper: “We follow the advice of those who actually have the information and intelligence necessary to make these determinations: our national-security agencies.
“We will continue to do our diligence to review the potential national-security ?implications, as we have been doing since day one. We never have and we never will compromise on national security.”