Wilson Bayly Holmes-Ovcon Ltd (WBHO) of South Africa said a proposed sale of its 88 per cent interest in Australian construction company Probuild will not proceed after it was rejected by Australia citing national security concerns.
After being told by Australia’s Foreign Investment Review Board (FIRB) that its investment application in Probuild would not be accepted, the buyer terminated the contract, WBHO said in a statement on Monday.
The construction and engineering company did not specify the buyer’s identity or the total value of the deal.
Australian media reported that China State Construction Engineering Corp had offered A$300 million ($231 million) for WBHO’s stake in privately held Probuild.
“The government does not comment on the application of the foreign investment screening arrangements as they apply or could apply to particular cases,” Australia Treasurer Josh Frydenberg said in an emailed response to Reuters.
WBHO said due diligence on the deal was completed and terms of the proposed transaction were otherwise materially agreed between the parties.
Australia in June said foreign investors would face greater scrutiny when bidding for sensitive assets, regardless of the size of the deal and whether the buyer was private or state-owned, as it unveiled the biggest shakeup of foreign investment laws in almost half a century.
Australia did not single out China, or any other country when announcing the overhaul, but the Chinese government has previously raised concerns with Australia about changes to its foreign investment rules.
Japan’s Kirin Holdings Co in August gave up on the sale of its wholly-owned Australian dairy firm Lion-Dairy and Drinks Pty Ltd to China Mengniu Dairy Co saying FIRB was unlikely to approve the deal. ($1 = 1.2995 Australian dollars)
