Australia blocks Chinese buyout of builder over security concerns

[SYDNEY] Australia blocked a Chinese construction company from buying out a domestic builder involved in several high-profile projects, citing national security concerns, local media reported, a sign that tensions between the trading partners remain elevated.

The majority owner of Probuild, South Africa's Wilson Bayly Holmes-Ovcon Ltd (WBHO), said in a Johannesburg stock market filing late Monday that "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".

The Australian Financial Review reported on Tuesday that China State Construction Engineering Corp planned to pay A$300 million ($231 million) for WBHO's 88 per cent stake in Probuild.

WBHO did not name the planned buyer and a Probuild spokeswoman declined to comment to Reuters. The Chinese company was not immediately available for comment.

Australian Treasurer Josh Frydenberg, who oversees the country's Foreign Investment Review Board, also declined to comment on Probuild.

He said in an email that "the government does not comment on the application of the foreign investment screening arrangements as they apply or could apply to particular cases".

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The move would be a second intervention by Mr 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 from buying domestic dairy producer Lion-Dairy and Drinks from Japan's Kirin Holdings, leaving the path clear for Australia-listed Bega Cheese to buy it.

Probuild's announced projects include construction of a new police headquarters for Australia's second-most populous state, Victoria, and a new headquarters for biopharmeutical giant CSL, which is making Covid-19 vaccine for the Australian population.

WBHO said in the filing that it "remains optimistic about the fundamentals of Probuild and its prospects in the Australian market and continues to assess all potential opportunities".

REUTERS