Skip to main content
The Globe and Mail
Support Quality Journalism
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); }

Aecon road crews work on Highway 407 near Highway 427 in Toronto, in this file photo.

Kevin Van Paassen/The Globe and Mail

Construction firm Aecon Group Inc. sold to a state-controlled Chinese firm after years of losing out on Canadian government contracts to larger global rivals, says its chief executive officer.

Faced with increasing competition at home and abroad, Aecon CEO John Beck and the board opted on Thursday to sell the 140-year-old company to Beijing-based China Communications Construction Co. Ltd. (CCCC) for $1.45-billion.

CCCC is one of the largest infrastructure companies in the world, with 118,000 employees and sales of $62-billion (U.S.) last year. Aecon has 12,000 employees and revenues of $3.2-billion (Canadian).

Story continues below advertisement

The sale comes after a strategic review that began in the summer, when Mr. Beck said the Aecon board concluded "we were too big to be small and too small to be big." The company, which helped build the CN Tower, will keep its name and management team under CCCC's ownership.

Mr. Beck said Aecon will use the Chinese company's backing to win larger, more complex projects in Canada and in international markets, in which Aecon is currently a minor player.

First, though, the deal will have to get through the federal approval process.

Foreign takeovers of this size are required to meet a so-called "net benefit test" to ensure they are in the interest of Canada.

The transaction will fall under close scrutiny because of CCCC's ownership structure – it is 64-per-cent owned by China Communications Construction Group, which is owned by the Chinese government – and because of the nature of some of Aecon's work.

CCCC is bidding for Aecon at a time when federal and provincial governments are projected to spend hundreds of billions of dollars on new infrastructure over the next 13 years – a figure that includes work on Ontario nuclear facilities that are current or previous Aecon clients.

The Toronto-based company builds, refurbishes, maintains and decommissions nuclear plants, having worked on 400 projects globally, according to its website. In Canada, the company has had contracts for various projects at the Bruce and Darlington plants on Ontario.

Story continues below advertisement

But Mr. Beck said that with CCCC's backing, Aecon is better-positioned to win large mandates for government infrastructure projects in competitions against domestic, U.S. and European construction and engineering rivals.

Aecon has won international projects in the past, including work on a nuclear power plant in China and airports in Europe, South America and Bermuda, and Mr. Beck said with CCCC's backing, the company plans to bid more aggressively for work outside of Canada.

Acquiring Aecon is part of an international expansion push at CCCC, and follows the takeover of a Texas-based engineering firm in 2010 and Australian construction company John Holland in 2015. Mr. Beck said he talked to executives at both firms while negotiating with their Chinese parent. "The feedback I got was that CCCC is a professional and supportive partner, a better partner in many regards than some companies based in the West."

CCCC is offering $20.37 a share for Aecon, a 42-per-cent premium to the stock price prior to announcement of the sale process in August. Analyst Benoit Poirier at Desjardins Capital Markets called the price "fair." Mr. Poirier said: "We believe CCCC's past acquisition of Australian construction company John Holland in 2015 will give investors confidence with regard to the transaction's benefits for both parties."

Aecon investors are expected to vote on the offer in December and if two-thirds of shareholders approve, the takeover is expected to close in the first quarter of 2018. In addition to Ottawa's process, CCCC's bid also requires regulatory approval in China. Some analysts see high odds that the deal will win approval at the federal level. "As much as we like Aecon, it is a contractor. It doesn't own any of the intellectual property that would make the deal a no-go with the Canadian public and investors," said analyst Frederic Bastien at Raymond James & Associates.

The Aecon deal represents one of the first major tests of the Trudeau government's approach to Chinese takeovers.

Story continues below advertisement

Lawyer Peter Glossop at Osler Hoskin & Harcourt LLP said: "Not to say there's necessarily a problem, but it's logical to assume that if you're in the nuclear business or power-generation business, these are the kinds of things that the government has identified as areas that they'd like to understand from a security perspective."

Investment bank Barclays advised CCCC on the acquisition, the firm's latest trans-Pacific deal. Barclays also advised China's Li family when it purchased Reliance Home Comfort in March for $2.8-billion. Aecon's financial advisers were BMO Nesbitt Burns Inc. and TD Securities Inc. CCCC's lawyers are at Blake, Cassels & Graydon LLP while Davies Ward Phillips & Vineberg LLP worked for Aecon.

With files from Reuters

Editor’s note: An earlier headline said the value of the Aecon deal was $1.5-billion. It has since been changed to $1.45-billion, which is the equity value. The equity value plus debt would equal $1.51-billion.
Should you be investing in ETFs or mutual funds? Rob Carrick, personal finance columnist, lays out specific investments, services and brands that are currently great deals for Canadian investors.
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies