Jun 12, 2018
In a recent article in The Globe and Mail, journalist Jeffrey Jones examines the federal government’s decision to block China Communications Construction Co. Ltd.’s proposed acquisition of Aecon Group Inc. As he explains, the government referred to national security concerns as the reason for saying “no” to the takeover. According to Jones, the decision may leave foreign investors – particularly those from China – uncertain about Canada’s policy when it comes to reviewing and approving potential deals. For clarification, the author consults Peter Glossop, a partner and foreign investment lawyer in Osler’s Toronto office. Peter explains that such uncertainty has become an issue that clients need to understand.
“I would say that the national security question is definitely a live one you need to pay attention to,” he says. “This requires you to really assess the relative risks of potential buyers – one against the other.
“I won’t say it’s always going to be Chinese, but any buyer that raises a potential security concern – you need to discount the price they’re paying because it may be more attractive to you financially, but on the other hand look at the regulatory risk and look at the time required.”
Peter concludes by pointing out that the rejection of the Aecon deal doesn’t represent a new approach to Chinese investment by the Liberal government. In fact, he points out, the current government has approved more deals than it has rejected.
If you subscribe to The Globe and Mail, you can learn more about the Aecon decision by reading Jeffrey Jones’ full article “Aecon ambiguity: In Ottawa, there are no easy answers to the China question” from May 25, 2018.