A fund manager said IJM has many “prized assets” and therefore, it was not a surprise if there are more than one offers for the conglomerate.
PETALING JAYA: A bidding war for IJM Corp Bhd
is likely to be “incrementally positive” for the conglomerate despite facing investigations over an alleged RM2.5bil money-laundering scheme, according to MBSB Research.
The comment by MBSB Research was made following a local news report that there could be at least three or four other offers to acquire IJM, in addition to Sunway Bhd’s RM11bil bid.
The potential offerors named in the report were a Sarawak government-led bumiputra consortium, YTL Corp Bhd and UEM Corp Bhd.
Meanwhile, AFA Group is also said to be exploring options to acquire IJM’s toll concession business.
AFA, which is led by Tan Sri Azmil Khalid, is the operator of Kuala Lumpur-Karak Highway and East Coast Expressway phase one.
The accuracy of the report has yet to be confirmed at this juncture.
“Considering Sunway’s RM11.04bil voluntary takeover offer at RM3.15 per share, it would be reasonable to expect competing bids, if any, to offer a better deal or structure,” said MBSB Research in a note.
A fund manager told StarBiz that IJM has many “prized assets” and therefore, it was not a surprise if there are more than one offers for the conglomerate.
“This turns up the heat on Sunway.
“The company offered to pay IJM shareholders only 10% in cash, while the rest were via Sunway shares.
“That is not very attractive.
“Will Sunway readjust its offer and increase the cash portion?” said the fund manager.
Regardless, MBSB Research has recommended IJM shareholders to accept Sunway’s offer.
MBSB Research said Sunway’s offer at RM3.15 per share valued IJM at a forward price-to-earnings multiple of 21.1 times, based on estimates for the financial year 2027.
This is in line with its five-year mean at 21.4 times.
“This offer price from Sunway is also close to the net tangible asset per share of IJM at RM3.17.
“While the offer price of RM3.15 is not generous and a slight 4.3% discount to our fair value, we believe it is fair, based on the above comparisons,” the research house said in a note.
For now, the research house maintained its fair value for IJM at RM3.29.
According to the research house, investigations by the authorities are still at preliminary stages with no charges being brought against the group or any individuals to date.
Nevertheless, this could weigh on IJM, which may lead to selling pressure, at least until the investigation is complete, it added.
“The Malaysian Anti-Corruption Commission (MACC) probe introduces additional scrutiny and execution risk on the proposed takeover deal, with delays likely as all parties would await clarity from the completion of the investigation.
“We view that the probe will likely affect timing and near-term sentiment rather than the longer-term attractiveness of the group.
“Sunway had also clarified that it would continue with the takeover offer,” according to MBSB Research.
Going by news reports, the MACC is investigating RM2.5bil worth of overseas assets, suspected manipulation of procurement process and potential conflicts of interests.
A total of 55 personal and corporate bank accounts with funds amounting to RM15.8mil have since been frozen.
The reports suggested that MACC is also looking into allegations of share price manipulation.
