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Aecon road crews work on Highway 407, near Highway 427 in Toronto, in this file photo.

Kevin Van Paassen/The Globe and Mail

The outcome of a potential national-security review is a risk to a Chinese construction company completing a $1.45-billion takeover of Canada's Aecon Group Inc., even as the target's chief executive plays down the possibility.

Ottawa will pore over the takeover bid from China Communications Construction Co. Ltd. (CCCC) – the largest in this country by a state-controlled firm in several years – as part of a test of its net benefit to Canada and the domestic construction and engineering industry. Aecon's involvement in nuclear power and other electricity-generation projects could trigger a full-fledged probe into any security implications.

Prime Minister Justin Trudeau said on Friday that foreign investment remains important for the Canadian economy, but any deal must meet several criteria related to protecting intellectual property and keeping citizens safe.

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"In the case of this Aecon proposed purchase, certainly the Investment Canada Act will be applied in full and we will look very, very carefully at security issues, at economic impacts, at whether or not this is truly in the national interest," Mr. Trudeau said in Saint-Bruno-de-Montarville, Que.

He did not say specifically whether the deal will undergo a routine security screening, which all deals with foreign buyers are subject to, or a comprehensive security review.

"We suspect that this deal will be highly scrutinized in Canada with some politicians calling for a full-scale national-security review," Canadian Imperial Bank of Commerce analyst Jacob Bout said.

"Though potential Canadian regulatory issues regarding [Aecon's] nuclear business are a risk to the deal closing, we think the deal will eventually go through," Mr. Bout wrote in a note to clients.

The agreement, announced on Thursday, followed an auction by Aecon, whose chief executive, John Beck, said was hamstrung in its ability to land major international contracts due to its relatively small size in comparison with major competitors. CCCC, one of the world's largest construction companies, is 64-per-cent-owned by China Communications Construction Group, a state-owned enterprise.

CCCC has committed to keeping Aecon's headquarters in Canada and retaining current management and employees. Acquiring Aecon is part of an international expansion push, and follows the Chinese firm's takeover of a Texas-based engineering firm Friede & Goldman in 2010 and Australian construction company John Holland in 2015.

The last sizable Chinese takeover of a Canadian business with security implications was this year's purchase of Vancouver high-tech firm Norsat International Inc. by Hytera Communications Corp. It received a routine screening in Canada. That rankled the U.S. Defence Department, for which Norsat had contracts.

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Mr. Beck said on Thursday that the deal should ease through government probes and close on schedule, partly because Aecon's involvement in Canada's nuclear industry is on the construction and maintenance sides, not ownership.

As part of its suite of services, the Toronto-based company builds, refurbishes, maintains and decommissions nuclear plants, having worked on 400 projects globally, according to its website. In Canada, the company has had contracts for various projects at the Bruce and Darlington plants in Ontario.

"I would be surprised if they go to the in-depth national-security review. I saw members of the opposition suggesting that's what they thought was appropriate. I don't know if that's required here," said Chris Murray, analyst at AltaCorp Capital Inc.

"There's always the questions around nuclear. That's certainly the one that sticks in the forefront for us in terms of security. There's also a fairly understood acknowledgment that China is actively looking at pursuing nuclear for civil purposes."

CCCC has offered $20.37 a share for Aecon. The deal is scheduled to close by the end of the first quarter of 2018.

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