In a significant development, Australia has blocked a Chinese construction company from buying out a domestic builder involved in several high-profile projects, citing national security concerns, reported local media reports.
In a regulatory filing to the Johannesburg stock market filing late Monday, South Africa’s Wilson Bayly Holmes-Ovcon Ltd (WBHO), the majority owner of Probuild, said “a major international construction and civil services company” pulled its offer after learning Australia’s foreign takeover regulator would reject it “on the grounds of national security”.
On Tuesday, in a report the Australian Financial Review said, China State Construction Engineering Corp had planned to pay $231 million (A$300 million) for WBHO’s 88% stake in Probuild.
WBHO did not name the buyer. Probuild’s spokeswoman declined comment.
The Chinese company was not immediately available for comment.
Australian Treasurer Josh Frydenberg, who oversees the country’s Foreign Investment Review Board, declined to comment on Probuild. In an e-mail, he said “the government does not comment on the application of the foreign investment screening arrangements as they apply or could apply to particular cases”.
The development marks the second such intervention by Frydenberg to stop a buyout by Chinese interests since he overhauled the country’s foreign M&A rules last year to include security concerns as a reason for blocking a deal.
Since then, Australia has stopped China Mengniu Dairy Co from buying domestic dairy producer Lion-Dairy and Drinks Pty Ltd from Japan’s Kirin Holdings Co, leaving the path clear for Australia-listed Bega Cheese to buy it.
Incidentally, Probuild’s announced projects includes the construction of a new headquarters for bio-pharmeutical giant CSL Ltd, which is making COVID-19 vaccine for the Australian population, as well as the construction of a new police headquarters for the state of Victoria.
In the filing WBHO said it “remains optimistic about the fundamentals of Probuild and its prospects in the Australian market and continues to assess all potential opportunities”.