Federal treasurer Joe Hockey has given the go-ahead to the $1.15 billion acquisition of Leighton Holdings’ subsidiary John Holland by China’s CCCC International.
John Holland, whose current projects include work on the North West Rail Link and part of Victoria’s Regional Rail Link, was put up for sale last year by Leighton, which is looking to improve its gearing in the face of a slowdown in the global construction industry.
Other rumoured potential suitors in the deal included South Korea’s Samsung and Brisbane’s ATEC Rail, but CCCCI was announced the winner after a several-month bidding process.
CCCCI is owned by the Chinese state-owned business China Communications Construction Company (CCCC). The Chinese company and Leighton signed a binding agreement late in 2014.
Hockey, who has blocked at least one major international acquisition in the past (the attempted acquisition of GrainCorp by US giant Archer Daniels Midland), approved the John Holland deal on Wednesday.
“The Government welcomes foreign investment where it is not contrary to our national interest,” Hockey said.
“Foreign investment has helped build Australia’s economy and will continue to enhance the wellbeing of Australians by supporting economic growth and prosperity.”
Hockey also responded to concerns by some who noted the debarment of CCCC by the World Bank in 2011, following alleged fraudulent practices during work on the Philippines National Roads Improvement and Management Project.
“I note there have been some media reports about CCCC in relation to a World Bank debarment,” the treasurer said. “I have sought advice on these and other issues in relation to CCCC. As a result, appropriate arrangements have been put in place to mitigate any concerns in relation to this issue and I am satisfied that this investment is not contrary to our national interest.”
Leighton has said its work in hand will fall by roughly $5.5 billion after the deal occurs.