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Aecon road crews work on Highway 407, near Highway 427 in Toronto, in this file photoKevin Van Paassen/The Globe and Mail

Investor skepticism appears to be growing that Aecon Group Inc.'s takeover by a Chinese company will be approved by the Canadian government, at least in its present form.

Shares of the Toronto-based construction company have dropped to their lowest level relative to China Communications Construction Co.'s offer price of $20.37 since the deal was announced in October. The gap between the share price and the offer stood at $1.78 at midday on Wednesday.

The Canadian government launched a full national security review of the takeover bid last month under a section of the Investment Canada Act that allows the government to block deals that could be "injurious to national security." It hasn't given any updates since then.

The transaction could see additional delays, be blocked altogether or have conditions set that would require divestiture of some of Aecon's assets, according to Chris Murray, an analyst at AltaCorp Capital Inc. If a divestiture is required, it would most likely be Aecon's telecom business, which generates annualized revenue of about C$150 million, he said.

"We believe there is a very low probability of the transaction being approved as is, given security concerns expressed by the federal government and other allies around telecom infrastructure, particularly as Canada embarks on a once-in-a-generation process of replacing its fiber and wireless networks," Murray wrote in a note published Tuesday.

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