Yesterday IJM Corporation Berhad received a conditional voluntary takeover offer from Sunway Berhad (Sunway) to acquire all its outstanding shares for a total consideration of RM11.04 billion, or RM3.15 per share. The offer is structured as a combination of cash and new Sunway shares, with the completion of the exercise anticipated by the third quarter of calendar year 2026 (3QCY26).
The offer price of RM3.15 per share comprises: 10% in cash, amounting to RM0.315 per share. 90% via the issuance of new Sunway shares, valued at RM2.835 per share, based on an issue price of RM5.65 per new Sunway share.
Sunway has stated it does not intend to maintain IJM’s listing status should the public shareholding spread requirement not be met. If the minimum acceptance threshold is reached, Sunway plans to eventually seek the delisting of IJM and explore consolidation exercises, including the expected merger of IJM’s construction, manufacturing, and quarrying businesses with Sunway Construction (SUNCON).
Investment banks have offered divergent views on the attractiveness of the RM3.15 offer price.
Accept: MBSB Research revised its fair value for IJM Corp from RM3.60 to RM3.29 after switching to a Sum-of-the-Parts (SOTP) valuation method to better reflect IJM’s diversified structure. Despite acknowledging the offer price is “not great,” the research house believes it is “fair” and recommends investors to accept the offer. MBSB highlights that shareholders accepting the offer will still benefit from the construction and infrastructure upcycle, as well as the synergy potential of the merged group through their new Sunway shares.
Reject: In contrast, Kenanga Research maintained its SOTP-based target price of RM3.40 for IJM Corp. The firm expressed the view that the offer price of RM3.15 “lacks attractiveness” as it sits below their fair value. Furthermore, Kenanga points out that based on their RM4.73 target price for Sunway, the implied value of the offer for IJM is only RM2.69, which is below IJM’s pre-offer share price.However, Kenanga also provided a balanced perspective, noting that the RM3.15 offer represents a 14.5% premium to IJM’s previous closing price and is close to its Net Tangible Asset (NTA) per share of RM3.17.
Synergies and Outlook
Both research houses acknowledge the strategic merits of the consolidation, anticipating that the enlarged entity could enhance operational efficiency. Potential benefits include improved construction margins for IJM and synergies across the property and industrial manufacturing segments.
IJM’s near-term outlook remains strong, with management targeting RM6 billion to RM8 billion in order book replenishment for the financial year 2026 (FY26). This is underpinned by significant opportunities, including major data centre and industrial projects, the civil servant housing project in Nusantara, Indonesia, and domestic infrastructure prospects like the Penang LRT Mutiara Line (Package 2) and the Penang Airport expansion.
