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

OTTAWA — The Aecon construction firm will likely be allowed 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 participation in Canadian construction and engineering projects such as the CN Tower, Vancouver’s SkyTrain, the 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 under intense domestic pressure to reject the takeover bid.

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 from security agencies, the government believed there is “a potential of injury to national security.”

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

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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.

Lu Shaye, China’s ambassador to Canada, said Tuesday that there should be no concerns about the proposed acquisition of Aecon because the Chinese side is only focused on business and market interests.

“My first impression, to tell you the truth, (is) that I think the Canadian media or the Canadian public is too sensitive about the Aecon case because Aecon is just a construction company,” Lu said in response to a question about the takeover bid during a news conference at the Chinese embassy in Ottawa.

“From your side, you have your rules and regulations on the foreign companies overtaking Canadian companies. I think for the national security issue it is your internal affairs. The Chinese side does not want to interfere (with) it.”

Lu, who spoke through an interpreter, added that China just wants to ensure Canada has the same standards for Chinese companies as it does for foreign companies from other countries proposing to take over Canadian firms.

The Infrastructure Canada briefing document said all foreign investment transactions undergo a process to determine their net economic benefit for Canada. They are also subject to a national security review led by the country’s security agencies, the note said.

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.

The government document noted some possible economic positives for Aecon if CCCI is permitted to take it over.

“At this time, there is not enough information available to determine whether the acquisition will benefit the infrastructure sector in Canada,” the document said.

“However, the firms in Australia and Texas which were bought in 2015 and 2010 by CCCI have grown since their purchase and expanded operations internationally.”

If the takeover is accepted, Aecon would maintain its headquarters in Canada and keep its Canadian management team.

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.

Andy Blatchford, Mike Blanchfield and Jordan Press, The Canadian Press