Aecon Group Inc., Canada’s largest publicly-traded construction business, says it has agreed to be acquired by Chinese-owned CCCC International Holding Limited (CCCI) for $1.51 billion, or $20.37 per share in cash.
“We believe this is a very positive outcome for Aecon and our key stakeholders,” said Aecon chairman Brian Tobin in a news release. “This transaction is the result of an active and diligent sale process that has enabled us to select an outstanding partner and create significant shareholder value.”
“This is an excellent fit for both of our companies,” said CCCI president Lu Jianzhong. “Aecon has a strong management team and a very impressive track record that have made it a leading construction company in Canada and a pioneer in public private partnerships and concession operations. It will now gain access to significant capital, complementary infrastructure expertise and an international network to support its growth ambitions.”
THE Globe and Mail reports the company purchasing AECON is controversial, with a recently-expired World Bank bidding ban for fraud, and concerns about security and its extensive ownership by the Chinese government.
“The vision and leadership of John M. Beck, president and CEO, have built Aecon into the successful company it is today, a diversified business focused on innovation and customer service with a formidable management team. We will continue to rely on John’s experience and leadership as we together take Aecon to a new level.”
“This transaction creates significant and immediate value for Aecon shareholders, strengthens our competitive position in Canada and abroad with enhanced capabilities and financial resources, and provides expanded opportunities for our people,” Beck said in a statement. “We look forward to partnering with a global leader while retaining Aecon’s Canadian headquarters and values. I’m excited and proud to be part of this new chapter for Aecon and for Canada. And I am personally committed to working with the Aecon management team and CCCI on CEO succession planning which began last year, prior to our exploring the sale of the company.”
In the statement, CCCI said it recognizes Aecon as a leading provider of construction services spanning the four core segments of infrastructure, energy, mining, and concessions with competitive know-how, state of the art facilities, experienced personnel and leading market positions.
CCCI says it is committed to ensuring that the transaction will deliver benefits to Canada, including:
- CCCI’s size and financial strength will augment Aecon’s access to capital and its ability to bid for larger and more complex projects in Canada, enhancing domestic competition for construction services, and will enable it to compete for more international projects;
- CCCI will seek out areas in which Aecon could deploy its unique expertise across CCCI’s international network;
- Aecon will continue to be headquartered in Canada;
- Retention of Aecon’s Canada-based employees, offering opportunities for Canadians to benefit from expected future growth;
- Continuity of Canadian management and ongoing adherence to Canadian standards of corporate governance;
- Preservation of the iconic Aecon brand in Canada; and
- Aecon’s Corporate Social Responsibility and Sustainability Policy will continue, as will its support for Canadian suppliers and community organizations and its commitment to operate in a safe and responsible manner
CCCI is the overseas investment and financing arm and a wholly-owned subsidiary of China Communications Construction Company Limited (CCCC), one of the world’s largest engineering and construction groups.
The transaction will be implemented by way of a statutory plan of arrangement under the Canada Business Corporations Act and is subject to customary closing conditions, including court approval of the arrangement; approval of two-thirds of the votes cast by holders of common shares in person or by proxy at a special meeting of Aecon shareholders; and applicable government and regulatory approvals under the Investment Canada Act, the Canadian Competition Act and from relevant authorities in China.
The parties expect to close the transaction by the end of the first quarter of 2018. The transaction is not subject to any financing condition.