Toronto Star

BUILDING BRIDGES

Companies say CCCI’s size will enhance Canadian firm’s ability to compete globally

- SCOTT DEVEAU BLOOMBERG

Chinese engineerin­g giant agrees to buy Canadian firm Aecon for $1.19B as route to growth,

NEW YORK— Aecon Group Inc. agreed to be acquired by a unit of China Communicat­ions Constructi­on Co. for $1.19 billion in cash, giving the Canadian company more heft to bid on global infrastruc­ture projects.

Aecon, which helped build Toronto’s landmark CN Tower, said in a statement that CCCC Internatio­nal Holding Ltd. (CCCI) would pay $20.37 a share, or 23-per-cent higher than Aecon’s closing price Wednesday. The company will continue to be based in Canada with a Canadian management team.

“We believe this is a very positive outcome for Aecon and our key stakeholde­rs,” Brian Tobin, Aecon’s chairperso­n, said in the statement.

The Toronto-based company confirmed in August it was exploring a sale. Activist investor Eric Rosenfeld of New York-based Crescendo Partners was nominated to Aecon’s board in June. Rosenfeld held 214,000 shares as of July 7, according to data compiled by Bloomberg.

Aecon has been without a permanent chief executive officer since last November, when executive chairperso­n and founder John Beck replaced Terrance McKibbon on an interim basis.

“This is an excellent fit for both our companies. Aecon has a strong man- agement team and a very impressive track record,” Lu Zianzhong, president of CCCI, said.

The companies said CCCI’s size and financial strength will augment Aecon’s access to capital and its ability to compete for larger projects in Canada and around the world. The deal is worth $1.51 billion including debt, the companies said.

The sale, which is being structured as a plan of arrangemen­t and subject to standard approvals, is expected to close by the end of the first quarter of 2018, the companies said. If Aecon were to find another buyer, it would be required to pay a $50 million terminatio­n fee. If CCCI backs out, including failure to get the required approvals in China, it is subject to a $75 million terminatio­n fee.

Aecon operates companies across the mining, infrastruc­ture, energy and services industries, building projects from factories, roads and sewers to theatres, book stores and hotels, according to its website.

CCCI’s Beijing-based parent is one of the largest engineerin­g and constructi­on companies in the world. Its core business activities include infrastruc­ture constructi­on and design and dredging, with revenue of $62 billion (U.S.).

Bank of Montreal and TorontoDom­inion Bank acted as financial advisers to Aecon, while Davies Ward Phillips & Vineberg provided legal advice. Barclays PLC provided financial advise to CCCI while Blake, Cassels & Graydon provided legal advice.

 ?? DREAMSTIME ?? Aecon, which helped build Toronto’s landmark CN Tower, has agreed to be acquired by China Communicat­ions Constructi­on Co.
DREAMSTIME Aecon, which helped build Toronto’s landmark CN Tower, has agreed to be acquired by China Communicat­ions Constructi­on Co.

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