Construction shares jump on rich bid for Flint
(Reuters) - Shares in Aecon Group (ARE.TO: Quote) and other Canadian construction companies surged on Tuesday on investor hopes they could become takeover targets after news that competitor Flint Energy Services FES.TO will be bought at a steep premium.
Shares in Aecon leaped nearly 9 percent after Flint and U.S.-based URS Corp URS.N said on Monday - when both Canadian and U.S. stock markets were closed - that URS will buy the Canadian oil patch construction group for about C$1.25 billion ($1.26 billion), a 68 percent premium to Flint's latest closing share price.
"Aecon down the line definitely could be a takeover target," said Alta Corp analyst Maxim Sytchev.
"Canada and Australia are the only two markets that are in growth mode... Management teams are getting paid to show growth so they are looking into Canada right now," he said.
German-based Hochtief AG (HOTG.DE: Quote) has been looking at Canada for several years and tried to buy Aecon in 2006, Sytchev said. Last November, Hochtief bought privately owned Edmonton-based Clark Builders.
Like Flint, Aecon has operations in the fast-developing oil sands in the Western Canadian province of Alberta.
Among other construction companies, Bird Construction (BDT.TO: Quote) rose 4 percent on the Toronto Stock Exchange on Tuesday, North American Energy Partners (NOA.TO: Quote) added 6.5 percent, and Canam Group Inc (CAM.TO: Quote) jumped nearly 11 percent.
(Reporting By Nicole Mordant in Vancouver; Editing by Peter Galloway)
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