‘The Canadian construction sector is for sale,’ as Aecon looks for a bidder

Canada’s construction industry may soon have a better idea of how attractive it is to the increasingly globalized building sector as one of its biggest catches sits on the auction block awaiting bidders.

Toronto-based Aecon Group Inc. is in the process of courting suitors after it put it itself up for sale Aug. 25, a move analysts say will draw players across Europe, the U.S. and China looking to size up the company’s — and Canada’s — potential.

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.

However, analysts say its value has taken a major hit from the drop off of energy and mining projects due to a commodities downturn in recent years. Aecon’s share price has plunged 23 per cent in the past year alone to hover around $14 just before it announced it was weighing its options.

“The Canadian construction sector is for sale right now, it’s pretty cheap,” said Frederic Bastien, an analyst at Raymond James.

Bastien said there’s only a handful of companies globally that could make a serious bid for the company and that it would likely cost at least $1.5 billion to take it over. Interested parties could include Spain’s ACS Group, U.S.-based AECOM and Italian firms Astaldi and Salini, he suggested.

However, he added, any firms looking to bid on Aecon will be making a bet on a recovery in the resource sectors, as well as banking on an increase in government infrastructure spending.

“You have to believe that the natural resources sector will pick up, you have to be attracted, obviously, to the infrastructure spending.”

The federal government has been looking to give the construction sector, and the economy, a further boost with promises of $180 billion in infrastructure spending over 12 years, but analyst Mona Nazir at Laurentian Bank Securities says the initial excitement has worn off as the spending has been slow.

“We still haven’t seen that huge surge, and I think the initial expectations for that single high-digit organic growth, or even double digit growth, those expectations have been tempered in the market.”

She said the proposed $35 billion infrastructure bank, while also slow to get going, could speed up projects once it gets established, while the impact of the hit to commodity prices is starting to dissipate.

CIBC analyst Jacob Bout added Germany’s Hochteif as a possibility, but noted big international construction firms have become more focused on the U.S. market as it heats up, while also adding that Canadian regulators might not be so welcoming to Chinese interests.

AltaCorp Capital analyst Chris Murray speculated in a note that some of the most likely buyers are those who have already worked with Aecon, like U.S.-based Kiewit Corp and ACS Group.

He said he doesn’t see Canadian companies like SNC-Lavalin, WSP Global or Stantec making a run for Aecon because they’ve been increasingly turned focus to pure design work and away from construction, though at least one domestic company, privately-held construction firm Beattie LP has expressed an interest.

Murray said he expects to see strong interest for the company based on Aecon’s record backlog of projects, its very strong positioning in Canada and expectations that the country will remain one of the most robust infrastructure markets globally.

“With the announcement, we believe other bidders are likely to emerge making for a robust auction process for a very unique asset.”

Just Posted

Red Deer College waiting for feds to finalize marijuana legalization

Like businesses, Alberta and municipal governments, Red Deer College is waiting for… Continue reading

Class size only part of the problem say Central Alberta teachers

Though the Alberta auditor general’s report points out that classroom sizes continue… Continue reading

Lacombe County promoting crime prevention measures

County pushing Crime Prevention Through Environmental Design principles

Red Deer doctor concerned about patient transfers to rural hospitals

Family physician says the move creates less incentive for expansion at Red Deer hospital

Fire permit season begins in March

Earlier springs in last few years prompted Alberta government to move up fire permit season

WATCH: Red Deer’s River Bend upgrades officially open

River Bend Golf and Recreation Area is the latest venue to be… Continue reading

How to keep local news visible in your Facebook feed

Facebook has changed the news feed to emphasize personal connections. You might see less news.

Stores make push in scan and go tech, hope shoppers adopt it

NEW YORK — Shoppers at self-checkout lanes scanning all their groceries after… Continue reading

‘Stars seemed to have aligned’ for new Halifax CFL bid, commissioner says

HALIFAX — CFL fans in Halifax have been told the league is… Continue reading

The language of ‘Black Panther’? It’s real. Give it a try.

OTTAWA — The military’s top general has promised to get to the… Continue reading

New execution date set for Georgia’s ‘stocking strangler’

ATLANTA — A man known as the “stocking strangler,” who was convicted… Continue reading

Man says he kicked Chevy Chase in self-defence in dispute

SOUTH NYACK, N.Y. — A New York man says he kicked Chevy… Continue reading

Supporters of Tina Fontaine’s family march in Winnipeg to support her family

WINNIPEG — Hundreds marched through the streets of Winnipeg on Friday in… Continue reading

Most Read

Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month