The Canadian government has blocked the CAN$1.5bn sale of Aecon to China Communications Construction Company (CCCC) citing concerns over "national security".
A review into the deal was launched in February this year, with those opposed saying the sale would hurt competition and expose sensitive infrastructure to a foreign power.
In a statement, Navdeep Bains, Canada’s minister of innovation, said: "As is always the case, we listened to the advice of our national security agencies throughout the multi-step national security review process under the Investment Canada Act.
"Our government is open to international investment that creates jobs and increases prosperity, but not at the expense of national security."
Aecon has previously worked on projects in nuclear power, telecommunications and military training.
John Beck, Aecon president and chief executive, said: "While we are disappointed with the government’s decision, Aecon is and will continue to be a leading player in the Canadian construction and infrastructure market.
"Through our proposed transaction with CCCC we had outlined a vision in which Aecon would be better able to compete with the many large global construction companies actively working in Canada.
"The deal offered considerable benefits to Aecon and its various stakeholders. While we have been prevented from pursuing the transaction, we are moving forward from a position of strength.
"Over the past several months Aecon has secured numerous large-scale projects, has a record backlog, and a significant pipeline of opportunities ahead of it."
The deal was announced in October 2017 and would have been the second of CCCC’s Western acquisitions, after the sale of Australia’s John Holland in 2015.
Image: Aecon was founded by Scottish immigrant Adam Clark in Hamilton, Ontario (Aecon)