KUALA LUMPUR: The board of directors of IJM Corp Bhd
recommends that shareholders reject the takeover offer by Sunway Bhd, as it unanimously concurs with independent advisor M&A Securities that the takeover offer by Sunway Bhd is "not fair and not reasonable".
In an independent advice circular filed with Bursa Malaysia, M&A Securities said the offer price of RM3.15 per share - which will be satisfied in 31.5 sen in cash and about RM2.835 in consideration shares - is "not fair" as it represents a discount to the sum-of-parts value (SOPV) of the company.
The securities firm found in its assessment the offer represents a 46.1% discount to the estimated low value of IJM's share of RM5.84, and a 51.4% discount to the estimated high value of RM6.48.
Additionally, the offer has an implied value of RM3.08 per share as the cash consideration has not been adjusted for the two sen dividend announced by Sunway on Feb 25, 2026 - which represents an even steeper discount of 47.3% and 52.4% to the estimated value of IJM's shares.
Thirdly, M&A Securities also highlighted that the implied exchange ratio of IJM shares with Sunway shares under the offer of 0.501 is significantly lower than the implied exchange ratio of IJM shares with Sunway shares of 1.062 based on the mid-point of the estimated value of each IJM Shares of RM6.16.
As to the offer being "not reasonable", M&A Securities said given the free float of IJM shares is significantly higher than the minimum public spread requirement of 25%, shareholders have an established avenue to realise their investment through on-market transactions.
It saw no additional incentive for shareholders to confer control or influence to Sunway, given their current participation in the company's growth and value creation with full autonomy.
Shareholders in IJM would be ceding control in the company by becoming minority shareholders of about 20.6% stake in Sunway as opposed to 100% equity holders in IJM.
"As minority shareholders, accepting holders will have significantly less control and will assume exposure to the substantial integration, execution and transitional risks arising from the combination of two sizeable and diversified conglomerates with distinct operating models, asset compositions, management structures and strategic priorities.
"The anticipated benefits cited by the offeror are forward-looking in nature and contingent upon successful integration, alignment of business strategies and retention of key management personnel.
"Accordingly, the ultimate value to be realised by Accepting Holders will depend on the future performance and successful integration of Sunway Group and IJM Group following completion of the offer," it said.
M&A Securities added that Sunway shares are currently trading at valuation multiples higher than those of its peers, suggesting that a substantial portion of its anticipated growth and scale advantages has already been reflected in its prevailing market price.
As the offer consideration is predominantly share-based, accepting shareholders will not realise immediate value in cash but will instead rely on the sustained market valuation of Sunway shares.
