KUALA LUMPUR: Sunway Group expects the enlarged entity from its proposed takeover of IJM Corporation Bhd to achieve a market capitalisation of RM50 billion on the back of its track record and operational strengths.
Sunway Group founder and co-chairman Tan Sri Jeffrey Cheah said the combined entity would have a theoretical market capitalisation of RM45 billion with the potential for further upside.
“Yeah, the theoretical combined market cap is RM45 billion, but I believe with our strong brand and good management, I think it will go up to at least 50 billion,“ he told reporters after an extraordinary general meeting (EGM) held in relation to the conditional takeover offer for IJM Corp today.
In January, Sunway unveiled a proposal to acquire IJM Corp through a cash-and-share arrangement that values the group at RM3.15 per share, or roughly RM11 billion.
The offer is contingent on securing acceptances exceeding 50% plus one share.
M&A Securities, however, noted that IJM Corp shareholders have the option to exit via the open market rather than exchange their stakes for Sunway shares, pointing out that accepting the deal would effectively make them minority shareholders in Sunway.
However, the IJM Corp board, advised by M&A Securities, has recommended that shareholders reject the offer, citing that it undervalues the company.
M&A Securities estimated the fair value of IJM Corp shares to be between RM5.84 and RM6.48.
Major shareholders, including Permodalan Nasional Bhd and the Employees Provident Fund, have shown reluctance to support Sunway’s offer.
Sunway said that it would proceed with the bid to acquire IJM Corp and, if successful, the acquisition would allow Sunway to merge with IJM Cprp, forming a construction giant with combined assets of RM57.8 billion, positioning it among Malaysia’s largest listed property and construction groups.
At the EGM today, 99.97% of Sunway’s shareholders present voted in favour of the proposal.
“I’m no crystal ball, but if you look at what Sunway Healthcare Bhd has achieved, the direction is evident. We have grown our market cap from RM16.7 billion at listing to RM26 billion today – that’s the impact of the Sunway brand,“ Cheah said.
IJM Corp has a market capitalisation of RM8.64 billion as of yesterday’s market close.
Cheah said he is confident IJM shareholders will benefit from the deal, citing Sunway’s track record in retaining talent following acquisitions. “We just took over MCL Singapore six months ago. All the staff have decided to stay, because we look after our staff and motivate them much better than others.”
Integrating IJM’s workforce would be a key priority. “We’ll try to win over IJM’s staff; they want to join Sunway,“ he said.
Cheah defended its RM3.15 per share offer, saying it provides shareholders with immediate value and an opportunity to participate in long-term growth through equity.
He noted that the offer represents a premium to IJM’s current market price and reflects its long-term performance.
“Sunway has delivered total shareholder returns of about 387% over the past decade, compared with a 9% decline for IJM,“ Cheah said.
He added that accepting shares should be viewed as an opportunity to reposition as one of the strongest-performing platforms in the sector, with a strong, proven track record that has “consistently delivered growth and superior shareholder returns”.
“While IJM’s intrinsic value has been cited at higher levels, its realisation would depend on the successful execution of underlying strategies over time and prevailing market conditions. IJM’s market performance has not fully reflected this implied valuation,“ Cheah said.
Sunway co-chairman Datuk Seri Idris Jala said the integration would be carried out in three phases – completion of the acquisition by year-end, followed by a transition phase to identify revenue and cost synergies, and a final transformation phase.
“If you put the two together, we immediately are among the top 10 highest market cap companies in Malaysia. Detailed execution would be key to creating value for shareholders of both companies.”
Meanwhile, Maybank Investment Bank Bhd (Maybank IB) said with Sunway shareholders approving the conditional voluntary takeover of IJM Corp, it has now cleared a key hurdle for the exercise.
In a statement, the investment bank said the offer now hinges on the acceptance condition, which must be met by April 6, the first closing date and the 60th day from the posting date.
“If the acceptance condition is not met by the first closing date, the offer will lapse, and all shares tendered will be returned to shareholders,” it said.
As of yesterday, valid acceptances amounted to 436.7 million IJM shares, representing 12.5% of the company, with a further 40.9 million shares, or about 1.2%, received but pending verification.
In the statement, Maybank IB said that Sunway held no shares on the posting date and had not acquired any additional shares outside the offer during the period.