Toronto, Ontario – February 9, 2018: Aecon Group Inc. (TSX: ARE) issued the following statement about the Company and its proposed transaction with CCCC International Holding Limited (CCCI).
“There are a number of important issues to consider with this transaction,” said John Beck, CEO. “We fully support the Government of Canada processes, as established under the Investment Canada Act and the Competition Act. Over the last several months, Aecon and CCCI have been answering a number of valid and important questions about all aspects of our business and the Canadian market. The Competition Bureau has cleared the transaction and we continue to respond to officials from the Investment Review Division. But in order for this process to work properly, it is important that elected officials and the public have accurate information. Unfortunately, we have seen a series of false and misleading claims made by third parties and reported in the media. We feel compelled to set the record straight.”
- Following the close of the proposed transaction with CCCI, Aecon will continue to be led by its Canadian management team and will operate according to the company’s long-held values in full compliance with all applicable laws and regulations in Canada.
- CCCI is not the first international company that would be operating in Canada. The Canadian construction industry is a competitive international market that includes some of the largest firms in the world, particularly as projects have increased significantly in size, scope and complexity in recent years. Many of these firms have not established a long-term commitment to Canada, through the creation of Canadian headquarters or management teams. This is in contrast to CCCI’s approach to participating in the market through the acquisition of a Canadian-led company.
- Aecon does not own any intellectual property related to nuclear energy; nor does it possess other sensitive proprietary technology. Aecon offers construction and refurbishment support to clients in the nuclear industry.
- Michael Beattie claims to be a major construction company executive and his statements opposing the transaction have been widely reported. We have been unable to find any evidence that Mr. Beattie is a “veteran construction industry executive.” We know, for example, that his company is not a registered business. Neither he nor his company is a member of any Canadian construction association. He has also taken credit for a number of construction projects for which we can find no evidence of his participation.
- Some have alleged that CCCI has access to government subsidies from Beijing. Any subsidies its parent company, CCCC, has received are related to specific government R&D projects in China that would have been available to any company involved in those projects. CCCI does not receive government subsidies for its international activities. CCCC is a commercially focused, publicly traded company listed on both the Hong Kong and Shanghai stock exchanges and its shareholders include some of the world’s largest institutional investors.
- Members of the Conservative Party have raised a number of questions about the transaction in the House of Commons, some of which were based on statements made by Mr. Beattie. We have offered a briefing on the transaction to the Conservatives to provide them with the facts.
- It has been alleged that a Communist Party function will be established in Canada within Aecon. This is incorrect. The Party Committee function is a standard practice in China and will be based in Beijing. The purpose of this function is to advise the Board of CCCC on Chinese national strategic opportunities. Corporate decisions by CCCC and CCCI will continue to be made by their Board of Directors.
- In a recent opinion piece, University of Ottawa Professor Wesley Wark asserts “CCCC has, to date, done relatively little business in the economies of Canada's key security partners in the Five Eyes network (the United States, Britain, Australia and New Zealand). The proposed takeover by China Construction of Aecon positions Canada, uncomfortably, as a sort of beachhead for future investments in the West.” That is not correct. CCCI owns a construction business in Australia (John Holland Group) which is similar in size to Aecon, and an engineering business in the US (Friede & Goldman). Both businesses have been very successful since being acquired by CCCI and have continued to operate within industry practices in compliance with all local and national laws, while continuing to be led by local management teams using domestic labour.
- Professor Wark also incorrectly stated that Aecon is “embedded” in critical military infrastructure. Aecon is not building or involved in sensitive military installations.
- It has also been reported that the transaction “is opposed by most players in the Canadian construction industry.” Given that there are thousands of construction businesses in Canada, we suspect this claim is based not on fact but rather on the actions of the executive committee of the Canadian Construction Association. The executive committee, acting without consultation with or approval of its own Board of Directors or wider membership, has based its opposition on a 15-year old policy that opposed the establishment of Canadian Crown Corporations to bid against private companies. In no way does the Aecon transaction result in a Canadian (or any) Crown Corporation bidding against a private company.
- Moreover, our largest unions support the transaction. The Labourers’ International Union of North America, the International Union of Operating Engineers and Canada’s Building Trades Unions have all publicly expressed support for the acquisition as they appreciate it will make for a stronger Aecon.
- Large commercial and public-sector customers have also expressed confidence in Aecon and its future, as evidenced by its selection for major new projects from government agencies and clients, including BC Hydro, Bruce Power and CDPQ Infra, since our deal was first announced.
- Our shareholders overwhelmingly supported the transaction, with more than 99 per cent of votes cast approving the sale.
Mr. Beck concluded, “Aecon welcomes the review on the merits of the proposed transaction and will continue to seek to obtain all the necessary regulatory approvals to close the transaction and get on with the work of building a stronger Aecon and a better Canada.”
Aecon Group Inc. (TSX: ARE) is a Canadian leader and partner-of-choice in construction and infrastructure development. Aecon provides integrated turnkey services to private and public-sector clients in the Infrastructure, Energy and Mining sectors and provides project management, financing and development services through its Concessions segment. For more information, please visit www.aecon.com and follow us on Twitter at @AeconGroup.