Recently, the media reported that a Chinese company, CCCi International Holding Limited, made a $1.58 billion offer to buy 140-year-old Calgary-based Aecon and its assets including Pictou Shipyard. I asked myself, "Why?" and researched to decide if the sale would be good or bad for the Pictou area.
I very quickly learned that CCCi International Holding Limited, formed in 2012 and headquartered in Hong Kong, is the financing platform for overseas business of CCCC China Communications Construction Company Limited. It focuses on merger and acquisition, and restructuring and management of overseas assets; and investment, building, and operation of transportation infrastructure in overseas markets.
China Communications Construction Company Limited is headquartered in Beijing. It is a 100-year-old, state-owned, absolutely massive construction company interested in and bids on multi-billion dollar construction contracts in China and, increasingly in recent years, throughout the world.
This company does not bid on contracts to construct a ship or 50 rail cars. No, it bids on multi-billion dollar contracts to construct lengthy intercity highways and railways including all the required rails, bridges, tunnels, trains and stations. And increasingly, it's winning such contracts, not just in China but throughout the world. Some of these contracts are too massive to be financed by either the state or by its business community and require PPP (Public-Private Partnership) financing to make them viable.
That research led me to these conclusions.
First, the Pictou Shipyard business is such 'small potatoes,' so minuscule and insignificant in this deal that it's unlikely to be or have been a consideration of CCCi International Holding Limited in preparing its offer; of Aecon which wants to accept it; or of Canadian regulators who will very carefully review it under the Investment Canada Act and the Canadian Competition Act to ensure that safety and security is not being compromised and to ensure that it is in the net benefit of Canadians.
CEO John Beck says Aecon will follow all the rules and expects approvals every step of the way. With the acquisition deal, Beck says Aecon will continue to be headquartered in Canada while CCCC Ltd.'s size and financial strength will help it bid for larger and more complex projects.
"We have a long history of international projects that we've done, but we've always done one or two at a time – never more," Beck said and added, "We have expertise that is recognized around the world that we'll now be able to deploy more effectively, which means more jobs and more opportunities for Aecon based here in Canada."
In its 140-year history, Aecon has been involved in landmark construction and engineering projects, including the CN Tower, Vancouver's SkyTrain and the Halifax Shipyard. It currently has major contracts for Toronto transit and nuclear refurbishment, among others.
Beck says the company has $25 billion to $35 billion worth of business in the pipeline right now that it's bidding on. "So we want to be ready and we want to have the financial muscle to be able to compete with the international firms," he said.
This deal will benefit the Pictou Shipyard by adding assurance that steady work will continue there for many future years to come.