China Communications Construction Company to acquire Aecon for $1.51B

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By Ted Liu

CCCC International Holding Limited (CCCI), an wholly-owned overseas investment and financing subsidiary of China Communications Construction Company Limited (CCCC) (SEHK: 1800; SSE: 601800), has agree to acquire Aecon Group Inc. (TSX: ARE) for $20.37 per share in cash, representing an enterprise value of $1.51 billion.

The purchase price represents a 42% premium to Aecon’s unaffected share price on August 24, 20171 and a 9.2x EV/LTM EBITDA multiple. The board of directors of Aecon has unanimously recommended this transaction.

The transaction is expected to by the end of the first quarter of 2018. The transaction is not subject to any financing condition. Aecon will continue to be headquartered in Canada

“We believe this is a very positive outcome for Aecon and our key stakeholders,” said The Hon. Brian V. Tobin, P.C., O.C., Aecon’s Chairman. “This transaction is the result of an active and diligent sale process that has enabled us to select an outstanding partner and create significant shareholder value.”

“This is an excellent fit for both of our companies,” said Lu Jianzhong, President of CCCI. “Aecon has a strong management team and a very impressive track record that have made it a leading construction company in Canada and a pioneer in public private partnerships and concession operations. It will now gain access to significant capital, complementary infrastructure expertise and an international network to support its growth ambitions.”

Lu said: “The vision and leadership of John M. Beck, President and CEO, have built Aecon into the successful company it is today, a diversified business focused on innovation and customer service with a formidable management team. We will continue to rely on John’s experience and leadership as we together take Aecon to a new level.”

“This transaction creates significant and immediate value for Aecon shareholders, strengthens our competitive position in Canada and abroad with enhanced capabilities and financial resources, and provides expanded opportunities for our people,” said Beck. “We look forward to partnering with a global leader while retaining Aecon’s Canadian headquarters and values. I’m excited and proud to be part of this new chapter for Aecon and for Canada. And I am personally committed to working with the Aecon management team and CCCI on CEO succession planning which began last year, prior to our exploring the sale of the company.”

BMO Capital Markets and TD Securities are acting as joint financial advisors to Aecon. Barclays is acting as financial advisor to CCCI. Davies Ward Phillips & Vineberg LLP is acting as legal counsel to Aecon and Blake, Cassels & Graydon LLP is acting as legal counsel to CCCI.

Aecon Group is a leading provider of construction services. 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.

China Communications Construction Company 中國交通建設股份有限公司 is one of the world’s largest engineering and construction groups. Its core business activities include infrastructure construction, infrastructure design and dredging. It is primarily engaged in providing customers with integrated solutions services for each stage of infrastructure assets, including ports, terminals, roads, bridges, rail and tunnels, leveraging on its extensive operating experience, expertise and know-how accumulated from projects undertaken in a wide range of areas over the past six decades. CCCC has more than 118,000 employees (including 48,000 foreign employees) in more than 140 countries and regions.

CCCI’s subsidiaries include John Holland Group Pty Ltd (John Holland), one of Australia’s largest engineering and construction companies, and Friede and Goldman, Ltd. (F&G), a world leader and innovator in offshore architecture and engineering based in Houston, Texas.

photo credit: China Communications Construction Company