KUALA LUMPUR — Sunway Bhd’s takeover offer for IJM Corporation Bhd has been deemed “not fair” and “not reasonable” by the independent adviser appointed to assess the proposed deal, dealing a major blow to the RM11 billion bid.
In its evaluation, M&A Securities said Sunway’s offer significantly undervalues IJM, with the offer price representing a discount of as much as 51% to the estimated value of IJM shares.
The adviser said the offer was not reasonable because IJM shares remain liquid, allowing shareholders to realise their investment in the open market while continuing to benefit from the company’s future growth as a standalone group.
M&A Securities has therefore advised IJM’s board to recommend that shareholders reject the offer.
IJM said its board had agreed with that conclusion in full.
“The board has concurred with the conclusion and recommendation of M&A Securities that the offer is not fair and not reasonable,” the company said. “Accordingly, the board unanimously recommends that the holders reject the offer.”
Sunway launched the offer in January through a cash-and-share proposal valuing IJM at RM3.15 a share, or about RM11 billion in total. The bid is conditional upon securing acceptances representing 50% plus one share.
Under the proposed terms, every 1,000 IJM shares would entitle shareholders to RM315 in cash and 501 Sunway shares worth RM2,835. If the acquisition succeeds, the enlarged group would emerge as a serious rival to Gamuda Bhd, Malaysia’s largest construction firm by revenue.
However, M&A Securities said IJM shareholders would not need to exchange their holdings for Sunway shares in order to unlock value, arguing that they could instead sell their shares on the market if they wished to exit.
It also cautioned that accepting the offer would leave IJM shareholders surrendering their direct stake in IJM and becoming minority shareholders in Sunway, exposing them to fluctuations in Sunway’s share price as well as the execution and integration risks associated with combining two major diversified groups.
The adviser further noted that Sunway currently holds less than 1% of IJM’s shares, meaning it would have no influence over IJM should the takeover fail.
In its view, there is no compelling additional incentive for shareholders to accept the bid. Instead, investors could continue to participate in IJM’s potential future growth and value creation as an independent listed company, while the group retains full strategic, operational and financial control over its own direction.
M&A Securities also warned that IJM shareholders would end up holding only a minority stake of up to 20.6% in the enlarged Sunway entity, resulting in significantly reduced control while taking on substantial merger-related risks.
It added that IJM remains in an active value-creation phase, backed by a strong order book, diversified operations, geographic expansion and ongoing strategic initiatives, suggesting that the company’s underlying value has yet to be fully reflected.
