Aecon Sheds Mine Unit as Infrastructure Work Booms
Toronto contractor Aecon Group completed the sale late last month of its contract mining business as it focuses on its strengthening infrastructure business months after the Canadian government quashed the sale of Aecon to a Chinese government-owned firm.
Aecon announced the sale of the unit, which does environmental reclamation and overburden removal mostly in Alberta’s oil sands region, to North American Construction Group LLC (NACG), Acheston, Alberta, for about $150 million.
Stock analyst Zacks said on Nov. 26 that NACG, a heavy construction and mining services firm in Canada, seeks revenue growth through acquisition. In the first nine months of 2018, revenue rose 32.6% from the prior-year period to $279.1 million, and share value “outperformed its industry,” says Zacks. Operating margin was up by 3.9% in the same period, says the analyst.
Aecon CEO Jean-Louis Servranckx says the firm is executing a record $7-billion backlog, up from $4.3 billion a year earlier, and pursuing an “unprecedented number” of infrastructure and industrial bids. A joint venture of Aecon and Traylor Bros. last month won a $202-million water-supply tunnel project in Vancouver. Aecon also won a $526-million gas pipeline in the province in October as part of a JV.
Canada’s government last May halted a potential $1.2-billion buy of Aecon by a China state-owned contractor, citing national security issues. That intended acquisition kept Aecon from staying involved in the consortium building the $5.7-billion Gordie Howe crossing between Ontario and Michigan, in which it had a 20% equity share. The firm rejoined the team in August. The project is set to finish by 2024.
Aecon also said that Brian Tobin, a former cabinet minister and premier of Newfoundland and Labrador, will resign as its lead board director at year end for a new role as vice chair of BMO Financial Group.