Security Reviews Are Case by Case, Canada's Bains Says of AeconBy
Minister says he’ll ‘follow the process’ in takeover review
He expresses cautious optimism on Airbus-Bombardier deal
The Canadian minister reviewing a Chinese firm’s takeover of Aecon Group Inc. isn’t committing to a separate national review, saying security issues are rolled into all examinations of foreign acquisitions.
Innovation Minister Navdeep Bains said in a telephone interview Monday the government will "follow the process" and work closely with bureaucrats in its net-benefit review of the takeover by a unit of China Communications Construction Co. Those examinations can trigger fuller-scale security reviews.
Prime Minister Justin Trudeau pledged a full examination of the deal on Friday. He also wouldn’t commit to a separate security review.
“It’s a case by case basis,” on whether a national security review is implemented, Bains said. The government hasn’t yet formally been presented with a deal to review, he said. Once it is, it has 45 days to review the deal on a “net benefit” basis, though extensions can be granted. That process can lead to a security review being triggered.
“My view has been to make sure we follow the process,” Bains said, declining to comment on specific aspects of the case, including whether Aecon’s work with Canada’s Candu nuclear reactor is a barrier. Because security concerns are weighed in the smaller-scale net benefit examination, “every investment under the Investment Canada Act is subject to a national security review,” even without a full-scale one, Bains said.
The deal, announced Oct. 26, was for C$20.37 a share, or 23 percent higher than Aecon’s closing price a day earlier. The stock closed up 19 percent at C$19.73 on the day of the sale, and closed at C$19.52 Monday.
Trudeau said on Friday the Canadian government would look at “security issues” raised by the proposed Aecon takeover but refused to specify if a separate security review would be conducted. Canadian law allows the Trudeau cabinet to order a review on security grounds if the Innovation Minister “considers that the investment could be injurious to national security.”
Bains is also reviewing a deal in which Airbus SE would acquire a majority stake in Bombardier Inc.’s C Series jet program, a pact announced after the Montreal-based manufacturer discussed a deal with China. The Globe and Mail newspaper reported this month the Trudeau government signaled its preference for a deal with Airbus over China.
Canada is considering whether to launch free-trade talks with China. Trade Minister Francois-Philippe Champagne said in an interview Monday the government is still considering feedback from stakeholders. “We said to the Chinese very openly, we will do that on our terms, on our timetable and with eyes wide open,” Champagne said regarding China.
Bains said the government will consider production lines, jobs and intellectual property in reviewing the Airbus agreement but continued to signal it’s likely to be approved.
“We are cautiously optimistic, but we’re still going to follow the process,” he said of the Airbus deal. He declined to say what role, if any, Canada’s government had in steering Bombardier to a deal with Airbus instead of a Chinese counterpart.
“Ultimately it’s the company’s decision. From our point of view, it was really about market access,” he said. “The fact they’re able to sell this world class top tier aircraft in the world market presents benefits to the Canadian economy.”