North American Construction Group buys Aecon mining assets for CA$199M
- North American Construction Group announced this week that it is has reached a CA$199 (U.S. $154 million) all-cash agreement with Aecon Group to purchase the heavy equipment and related assets of Aecon's mining business.
- North American has paid Aecon an initial deposit of CA$10 million and will pay the balance in four installments, the last of which is due in 18 months. Included in the purchase is earth-moving equipment, light construction assets, support equipment and maintenance facilities. Aecon will keep running the mining business pending the close of the transaction, and, then, North American will take over, subject to the consent of existing customers and other partners. The deal is expected to generate up to CA$220 million in annual revenue for North American.
- Martin Ferron, North American's chairman and CEO, said it will apply the same "innovative maintenance practices and work methodologies" to the Aecon assets as it has to its existing equipment and operations" in order to help customers "maximize production and efficiency on each mine." Aecon officials said the mining business is "capital intensive" and outside of the company's focus on its infrastructure and industrial divisions. The transaction is subject to regulatory approval.
This transaction will likely proceed without controversy, unlike the failed China Communications Construction International CA$1.4 billion purchase of Aecon. The Canadian government nixed the deal citing the Investment Canada Act, which requires the investigation of foreign investments in order to uncover any national security threats. Unnamed sources told The Canadian Press there were fears around the Chinese construction company having access to sensitive information about some of the country's major infrastructure projects Aecon worked on in the past.
Before Canada's official rejection of the sale, Aecon and its related businesses dropped out of the Gordie Howe International Bridge consortium, a public-private partnership contract worth billions. Although there was no official comment from Aecon or bridge officials as to the reason behind the departure, the Windsor Star reported that both Canadian and U.S. officials were hesitant about a Chinese-owned company being privy to information about the movement of goods between the two countries.
In August, Aecon rejoined the Bridging North America group.
National security has come to play a big role in the construction industry, and in many circumstances construction workers must undergo background checks to gain access to jobs at facilities like airports and military installations. So, as contractors deal with an ever-tighter supply of workers, those engaged in projects at these locations must also ensure that those workers are able to pass security clearance measures.
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