PETALING JAYA: What was shaping up to be a major takeover by Sunway Bhd
may now face delays, as IJM Corp Bhd comes under investigation for an alleged RM2.5bil money-laundering scheme, analysts say.
Hong Leong Investment Bank Research (HLIB Research) said the probe could intensify due-diligence requirements and potentially push back the completion of the takeover, which had been targeted for the third quarter of this year.
Similarly, MBSB Research said the investigation introduces additional scrutiny and execution risk to the proposed takeover, which could be valued at up to RM11bil.
“As per the fundamental legal principle of being innocent until proven guilty, it is too premature to speculate on the matter.
“That said, we believe this latest development will weigh on the sentiment towards IJM until the investigation is complete.”
The Malaysian Anti-Corruption Commission (MACC) has confirmed an investigation into IJM, which follows a probe by the United Kingdom’s Serious Fraud Office into suspected money laundering and corruption.
The MACC is also believed to be probing suspected manipulation of the company’s share price.
Sources said two persons of interest have been identified– a senior member of the company’s management who holds a “Tan Sri” title and a company adviser. Both are believed to be overseas.
It is worth noting that allegations against IJM surfaced last March with regard to the Mass Rapid Transit 3 project in the Klang Valley.
IJM strongly refuted the allegations then and lodged a formal report with the Malaysian Communications and Multimedia Commission.
It is unclear if the previous allegations and the latest investigation are related.
The current MACC probe comes just a week after both Sunway and IJM announced a conditional voluntary general offer proposed by the former to the latter’s shareholders at an offer price of RM3.15 per share.
At this point, Sunway has not announced whether it is cancelling its offer for IJM as a result of the investigation.
However, HLIB Research said an acquirer or offeror cannot withdraw the offer without the Securities Commission’s (SC) written approval.
“Assuming a best case scenario for the deal, we foresee delay risks for the deal’s completion timeline.
“On the other hand, a worst case scenario, to our knowledge, would entail either withdrawal in writing to the SC or failure in obtaining shareholders’ approval, resulting in Sunway being prohibited from making another takeover offer for the next 12 months.”
Regardless of the latest development, HLIB Research said it views Sunway’s bid for IJM “positively”.
“We advise shareholders to accept the offer given that it is within reasonable margin to our previous target price of RM3.40.”
MBSB Research also told clients to accept the offer. While Sunway’s RM3.15 offer was “not generous”, the research house said it believes it is fair.
“This offer values the counter at a forward price-to-earnings multiple of 21.1 times, based on our 2027 estimates.
“This is in line with its five-year mean at 21.4 times. This offer price is also close to the net tangible asset per share of IJM of RM3.17,” MBSB Research said.
The research house also cautioned investors that the probe into IJM would affect sentiment, which may lead to selling pressure, at least until the investigation is complete.
As of press time yesterday, IJM’s stock fell by over 4% in intraday trading.
