Ottawa rejects sale of Aecon to CCCI
May 24, 2018
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Ottawa has told Aecon Group Inc. that the acquisition agreement it has with CCCC International Holding Limited won’t happen.
The Governor in Council yesterday issued an order under the Investment Canada Act directing CCCI not to implement its proposed acquisition of Aecon.
“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 M. Beck, President and Chief Executive Officer, Aecon Group Inc. “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 having been prevented from pursuing the transaction, Beck says that the company is 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,” he said.
Aecon reported a backlog of $4.6 billion at the end of the first quarter, which included $910 million of new contract awards booked in the quarter. Subsequent to the end of the first quarter, Aecon announced that:
• a partnership in which Aecon has a 24 per cent interest finalized a $5.0 billion contract for the Réseau express métropolitain Montréal Light Rail Transit project. The project will add $1.2 billion to Aecon’s backlog in the second quarter of 2018; and
• a consortium in which Aecon has a 33.3 per cent interest in the equity and construction and a 50 per cent interest in the 30-year maintenance agreement, secured the contract for the Finch West Light Rail Transit project in Toronto. Total contract is valued at $2.5 billion, which includes $1.2 billion in construction costs. This project will add $400 million to Aecon’s backlog in the second quarter of 2018.
As previously disclosed in Aecon’s first quarter 2018 results, the Company continues to expect revenue growth and adjusted EBITDA margin improvement in 2018 versus the prior year. The overall outlook is positive with areas of strength in Aecon’s business in infrastructure, nuclear, telecom, gas and power distribution, expected to outweigh the impact of fewer opportunities in commodity and oil related markets. Aecon’s balance sheet continues to be well-capitalized and the Company is confident in its ability to increase capacity as required to facilitate growth.
“We are fortunate to have a strong market position, effective industry partnerships, and outstanding employees,” said Beck, “all of which will help drive our future success.”
(Aecon Group Inc.)