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Federal Government Blocks Controversial Aecon Acquisition by Chinese Firm CCC International Holdings

On May 23, Innovation Minister Navdeep Bains announced that the federal government would block the proposed acquisition of Aecon Construction for CA$1.5 billion by Chinese firm CCC International Holdings following a national security review. The controversial acquisition was roundly criticized by intelligence experts, Members of the Opposition, and national media outlets as a threat to national security.

Aecon Construction is a Canadian construction and engineering firm that has participated in the construction of the CN Tower, the Vancouver SkyTrain, the St. Lawrence Seaway, and the Halifax shipyard. CCCI is the overseas acquisition arm of the China Communications Construction Co. (CCCC), one of China’s largest state-owned enterprises (SOE) with operations in over 80 countries. Former CSIS director Ward Elcock told the Globe and Mail that the operations of Chinese SOE firms have long been a concern for Canada’s national security, stating that “a state-owned company will always do the bidding of China”. In response to the media controversy surrounding the deal over the last several months, Chinese Ambassador Lu Shaye stated that “Canadian media or the Canadian public is too sensitive about the Aecon case, because Aecon is just a construction company.”

Many expect the decision to block Aecon takeover by the Canadian government to cast a shadow over the potential free trade talks with China and may even lead to retaliation. Aecon is CCCI’s second acquisition attempt of a major western corporation. Its first bid of Australia’s engineering and construction giant John Holland in 2015 passed the security review and concluded successfully.

To date, very few deals have been blocked under the Investment Canada Act. Minister Bains’ announcement marks the second blocked Chinese investment: in 2014, Beida Jade Bird, a Chinese firm, planned to build a $30 million fire alarm manufacturing facility in Saint-Bruno de Montarville, Québec. However, the project was blocked because the location of the plant was deemed too close to the Canadian Space Agency, two kilometers away.

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