IJM offers RM1.56bil for Road Builder

PETALING JAYA: IJM Corp Bhd yesterday revealed a RM1.56bil offer to take over and privatise Road Builder Holdings Bhd (RBH).  

Aseambankers Malaysia Bhd CEO Surachet Chaipatamanont told the media the proposed merger exercise would be executed in two steps. The merchant bank and Newfields Advisors Sdn Bhd are IJM’s joint advisers.  

Datuk Krishnan Tan (centre) with Surachet Chaipatamanont and AseambankersMalaysia executive vice-president Francis Goh at the media briefing.

Step one, he said, was an offer to purchase all the assets and liabilities of RBH for RM1.56bil that would be settled though an issue of redeemable unsecured loan stocks (RULS) by IJM. 

Step two would involve a voluntary general offer (VGO) for all the shares of RBH on the basis of one new IJM share valued at RM6 for every RBH share valued at RM3 each. That also works out to RM1.56bil based on RBH’s issued capital of 521.5 million shares. 

The RULS would be cancelled at the end of the whole exercise. IJM’s offer of RM3 for each RBH is a premium over the latter’s last traded price of RM2.83 which had advanced in recent weeks. 

IJM managing director Datuk Krishnan Tan said the sequence of events would be first, for the RBH board to decide whether to accept IJM’s offer to acquire all its assets and liabilities, which would later have to be voted on by RBH’s shareholders.  

It would then be up to RBH shareholders whether to accept the terms of the swap for IJM shares. If the sale of assets were agreed to, RBH shareholders who do not accept the share swap would be left holding RULS in RBH which would have become a shell company. 

The VGO is conditional upon IJM receiving acceptances that would enable it to own 50% plus one share in RBH.  

The offer would also trigger a mandatory general offer (MGO) for the 30% of RB Land Holdings Bhd that is not owned by RBH. The offer for RB Land, a 70%-owned listed subsidiary of RBH, is 50 sen cash per share. RB Land was last traded on Tuesday at 51 sen.  

Krishnan said the primary aim was to take RBH private but it was the intention to retain the listing of RB Land if there were not many acceptances for the offer. 

He described the VGO for RBH as an “unsolicited offer” and that IJM was starting from “zero base” in terms of shareholding in the company. IJM had not bought any shares in the 13% stake in RBH that was sold by the latter’s executive vice chairman Tan Sri Chua Hock Chin earlier this month.  

Upon successful completion of a merger between IJM and RBH, the enlarged IJM would have a market value of over RM4.5bil and assets totalling close to RM7bil.  

“That would put us in a different orbit and increase our capacity in local and international businesses. Our addressable market becomes bigger,” Krishnan said.  

He is keen for IJM to expand its balance sheet. “When we compete overseas, we’re very small, even on an enlarged basis, relative to the opportunities in Middle East and India,” he added. 

He also emphasised the increase in the group’s human capital after the merger. “We welcome talent. We will retain the Road Builder management in the enlarged IJM group,” he said, adding that the group would have “the largest pool of construction professionals in the country.”  

In outlining the value proposition for RBH shareholders in the merger proposal, Surachet said IJM was successful in penetrating high-growth overseas markets.  

“Pursuant to the merger, RBH shareholders will have better exposure in an internationally competitive construction group,” he added.  

To a question if it was fair to IJM shareholders that the company’s shares were valued at RM6, below its last traded price of RM6.45, Aseambankers head of equity markets Francis Goh said there was value for IJM as it would be issuing shares at a premium of 36% over its net tangible assets (NTA) of RM4.41 a share, whereas RBH shares are valued at just 7.5% above their NTA of RM2.79 each. 

Krishnan said a good price had to be offered for attractive assets. 

Related Story:New entity to play bigger role abroad 

IJM :  [Stock Watch]  [News

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 18
Cxense type: free
User access status: 3

Did you find this article insightful?


Next In Business News

Why dealmakers expect tech M&A to keep up its red-hot run
Volkswagen looks to claim damages from suppliers over chip shortages
China Evergrande New Energy Vehicle Co attracts investors to raise US$3.4b
Taiwan says asking chip firms to help ease auto chip shortage
Bank Islam assists 350,000 customers impacted by Covid-19
Morgan Stanley CEO's annual pay rises by over 20%
‘Unstoppable’ luxury stocks remind some investors of US tech
Ambani’s Reliance doubles down on 5G pledge after record profit
PUNB offers payment deferment, rental discount
CPO futures may undergo technical correction next week

Stories You'll Enjoy