Post takeover, Aecon could still bid on infrastructure projects, docs suggest

Andy Blatchford, Mike Blanchfield and Jordan Press, The Canadian Press</span>
Published Tuesday, April 10, 2018 4:18PM EDT

OTTAWA -- The Aecon construction firm will likely retain its ability to bid on government-funded infrastructure projects even if Ottawa approves a Chinese state-owned company's controversial proposal to take it over, an internal federal document says.

Last October, the CCCC International Holding Ltd. of China made a $1.5-billion bid to acquire Aecon Group Inc., which has a long history of taking part in Canadian construction and engineering projects such as the CN Tower, Vancouver's SkyTrain, St. Lawrence Seaway and the Halifax Shipyard.

The Trudeau government has been warned by experts to proceed cautiously when weighing any investment bids by Chinese state firms and to be as transparent as possible in reviewing the proposed deal. The Liberals have also come intense domestic pressure to reject the deal.

The federal government announced a full national security review of the Aecon deal in February. At the time, a spokesman for Economic Development Minister Navdeep Bains said that based on advice it received from security agencies, the government believes there is "a potential of injury to national security."

If the deal moves forward, however, the government is unlikely to put any restrictions on Aecon's ability to bid on projects funded under Ottawa's infrastructure plan, according to an internal government document obtained recently by The Canadian Press.

The federal government has budgeted $180 billion in total infrastructure spending over 10 years.

"It is not anticipated that the change of ownership of Aecon will affect its ability to bid on Canadian infrastructure projects," reads the document, which was prepared last fall by Infrastructure Canada.

"At this time, there is not enough information available on the transaction or the current and potential role of Aecon in federally funded infrastructure projects under the plan to accurately assess the impact of this transaction on the delivery of the Investing in Canada Infrastructure plan."

The memo was obtained under the Access to Information Act.

All foreign investment transactions undergo a process to determine their net economic benefit for Canada and are also subject to a national security review led by the country's security agencies, the document notes.

The CCCC International Holding Ltd. (CCCI) is a subsidiary of China Communications Construction Company Ltd. (CCCC) and, the briefing adds, is one of the world's largest engineering and construction firms.

It continues: CCCC generated revenue of US$62 billion in 2016 and its core business activities include the construction of ports, roads, terminals, bridges, rail and tunnels; Aecon, meanwhile, generated revenue of $3.2 billion in 2016.

Late last month, Aecon's self-imposed deadline to complete its sale to CCCI was extended to July 13 from March 30, given the federal government's ongoing national security review.

That review was expected to wrap up by the end of March, but Bains has said the government plans to take the time it needs to do its due diligence.

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