Canadian construction and infrastructure development company Aecon Group (TSX: ARE) said Thursday morning that it has agreed to be acquired by Chinese construction company CCCC International Holding Limited, the overseas investment and financing unit of infrastructure behemoth China Communications Construction Company Ltd, for $20.37 per share in cash.
The offer represents an enterprise value of $1.51 billion for Aecon, and a 42% premium to the price of ARE stock on August 24, the day the company said it was shopping for a buyer.
"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," Aecon chairman Brian Tobin in today’s news announcement.
Although being owned by a Chinese firm, Aecon keep its name and headquarters in Canada and be run by the same management team, less CEO John Beck who announced last year concurrent with the company looking to sell itself that he would be stepping down.
The Toronto-based company sees the new owner as delivering access to additional financial resources, as well as new platforms and partnerships for continued growth domestically and abroad.
Aecon’s board has unanimously approved the acquisition, but the deal remains subject to shareholder, government and regulatory approvals.
Aecon disclosed the news of the merger only moments before releasing results from the third quarter. During the July-to-September period, revenue slipped to $760 million from $838 million in the year prior quarter. For the nine months ended September 30, 2017, revenue was $2.12 billion, compared to $2.37 billion in the first nine months of 2016.
Net profit was $24.6 million, or 37 cents per diluted share, in Q3, down from $27.4 million, or 42 cents per diluted share, in Q3 2016. For the first three quarters of 2017, net profit was only $7.1 million, or 11 cents per share, versus $17.7 million, or 29 cents per share, a year earlier.
Shares of ARE shot ahead from Wednesday’s close at $16.52 to as high as $19.82 in Thursday morning trading. As of noon Eastern, shares have fallen back to $19.25 for a gain of 16.53% on the day so far.
