* CCCC had proposed to buy Aecon in a $1.18 bln deal
* China foreign ministry asks Canada to "abandon prejudices"
* Indicates rising wariness towards Chinese firms' overseas deals
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May 24 (Reuters) - Canada has blocked a proposed C$1.51 billion ($1.18 billion) takeover of construction company Aecon ARE.TO by a Chinese state builder on national security grounds, underscoring rising wariness of Chinese firms buying up assets in Western countries.
Aecon's takeover by overseas investment and financing arm of China Communications Construction Co Ltd 601800.SS was scheduled to close in February. But this was delayed after Canada extended a national security review. which has helped build Canadian landmarks including the CN Tower and the Saint Lawrence Seaway, saw its shares tumble 15 percent to a 10-month low on the Toronto Stock Exchange on Thursday.
The Canadian government has now ordered CCCC International Holding Ltd not to implement the proposed investment to protect national security, Canadian Innovation Minister Navdeep Bains said in a statement on Wednesday.
"Our government is open to international investment that creates jobs and increases prosperity, but not at the expense of national security," Bains said.
Canadian Prime Minister Justin Trudeau said earlier his government would closely monitor security issues when it decided whether to allow the deal, examining the implications for intellectual property protections. foreign ministry said it hoped Canada could "abandon its prejudices" and provide a level playing field for Chinese enterprises in response to a question about the Aecon deal.
"In principle, China always opposes the politicization of this kind of trade and investment activity and we oppose the mistaken method of carrying out political interference on the basis of so-called national security reasons," ministry spokesman Lu Kang said on Thursday.
Aecon said it was disappointed with the government's decision and was no longer pursuing a sale process. believe ... uncertainty around the company's future strategic direction, particularly with a CEO search underway, is likely to weigh on share prices substantially," AltaCorp Capital analyst Chris Murray said.
An executive from CCCC's investor relations team in Beijing told Reuters the company had yet to receive relevant documents from the Canadian government.
Ottawa's move comes as Canada is in exploratory trade talks with China as the country seeks to diversify its export markets.
Chinese interests in overseas assets has worried governments elsewhere such as in Denmark, whose officials have expressed concern over Greenland courting Chinese firms, including CCCC, to expand three airports. Committee on Foreign Investment in the United States (CFIUS), which scrutinizes foreign purchases of U.S. assets to protect national security interests, has also been tightening scrutiny of Chinese companies' acquisitions of American firms.
Earlier this month, Chinese conglomerate HNA Group dropped its bid for most of SkyBridge Capital. January, Ant Financial's plan to acquire U.S. money transfer company MoneyGram International collapsed after CFIUS rejected it over national security concerns. President Donald Trump has also blocked microchip maker Broadcom Inc's AVGO.O $117 billion bid to buy Qualcomm Inc QCOM.O on national security grounds, ending what would have been the technology industry's biggest deal ever amid concerns that it would give China the upper hand in mobile communications. BREAKINGVIEWS-Canada adds to global muddle with Chinese M&A veto