Government rejects Aecon sale
May 24, 2018
The Canadian government has issued an order under the Investment Canada Act that directed CCCC International Holding Limited (CCCI) to not go through with a proposed acquisition of Aecon Group. As a result, the proposed sales arrangement between Aecon and CCCI will not proceed.
”While we are disappointed with the government’s decision, Aecon is and will continue to be a leading player in the Canadian construction and infrastructure market,” said John Beck, president and chief executive officer of Aecon Group.
”Through our proposed transaction with CCCI we had outlined a vision in which Aecon would be better able to compete with the many large global construction companies actively working in Canada. The deal offered considerable benefits to Aecon and its various stakeholders. While we have been prevented from pursuing the transaction, we are moving forward from a position of strength. Over the past several months Aecon has secured numerous large-scale projects, has a record backlog, and a significant pipeline of opportunities ahead of it.”
In October of 2017, Aecon Group and CCCC International Holding Limited announced an agreement that would see CCCI purchase Aecon in an all-cash purchase of shares at a premium price of $20.37 per share. That put a $1.51 billion value on the deal.
The board of directors of Aecon had unanimously recommended the transaction, but it was understood that there were a number of regulatory approvals to be navigated before the deal could be consummated.
Following the announcement of the government decision, Aecon confirmed that the company will remain publicly traded on the Toronto Stock Exchange and its headquarters will continue to be in Toronto, with regional offices in Calgary and Vancouver. As would have been the case if the transaction had proceeded, management of the company is not expected to change. The company has reinstated its search for a new chief executive officer, and Beck will remain as CEO until his successor has been selected.
”Our dedicated board of directors, who were recently re-elected at Aecon’s May 10th Annual General Meeting, remain committed to providing ongoing guidance and governance to drive shareholder value and work in the best interest of the Company,” said Aecon’s chairman, The Hon. Brian Tobin. ”The board is also focused on the ongoing CEO search to select the right leader to guide the company in the future.”
The company reports that Aecon is no longer actively pursuing a sale process.