Security concerns block Chinese bid for Australian builder

A Chinese company's bid for an Australia-based building contractor has been abandoned after the Australian government signalled it would block the purchase over national security concerns.

A “major international” firm — reported to be China State Construction Engineering Corporation — walked away from its proposed purchase of Probuild after it was told the government would block the deal, according to the builder’s South African parent company Wilson Bayly Holmes-Ovcon (WBHO).

The potential buyer was told the purchase of WBHO’s majority stake, reportedly worth Aus$300 million (US$232 million), “would be rejected by the Federal Government on the grounds of national security”, the company said in an announcement to the South African stock exchange on Monday.

Relations between Canberra and Beijing were in free-fall throughout last year, with China hitting out at a list of issues including Australia‘s call for an inquiry into the origins of Covid-19 and a ban on Huawei’s participation in the nation’s 5G network.

The row has seen more than a dozen Australian sectors hit with import levies, with the barley and wine industries particularly badly hit. Exporters stand to lose as much as US$2-4 billion worth of sales.

In 2020, the Australian government tightened rules covering foreign investment in the country, with temporary measures allowing increased oversight on takeovers of local firms during the pandemic.

Probuild boasts a long list of major projects in Australia, including the construction of headquarters for the biotechnology giant CSL — which will produce local Covid-19 vaccines in the country.

Australian media reported that the advice on the proposed sale had come from Treasurer Josh Frydenberg, who also stepped in last year to stop the sale of a major dairy producer to a Chinese firm.

Frydenberg declined to comment on the reports.