PETALING JAYA: Sunway Bhd
believes its offer to acquire IJM Corp Bhd is appropriately valued amid some scepticism from the general public and an early rejection from the latter’s major 13.5% shareholder, Permodalan Nasional Bhd (PNB).
The group retained its stance that it will walk away from this proposed acquisition if it did not obtain a majority of IJM’s shareholders approval (50% plus one share) to proceed with this corporate exercise.
Sunway’s shareholders approved this proposed acquisition at its EGM yesterday, whereby its founder and chairman Tan Sri Sir Dr Jeffrey Cheah said it obtained a 99.97% approval for the deal.
“I spoke with some shareholders (of Sunway) and they are convinced it is a good deal.
“We have also just received a letter from the Malaysian Anti Corruption Commission clearing our name that their investigation clears us for this proposed IJM acquisition,” Cheah said at a press conference yesterday at its EGM.
In a presentation, Sunway’s co-chairman Datuk Seri Idris Jala reiterated the price being offered at RM3.15 per share for IJM’s shares is its fair value, also taking into consideration IJM’s historical performance.
Idris said the deal is designed to provide IJM shareholders with both immediate value and continued exposure to long-term growth through equity participation.
Sunway also rejected suggestions that it would rely on IJM’s balance sheet to finance the deal, clarifying that the 10% cash component of the offer would be fully funded by Sunway’s own resources.
It noted IJM also carries more than RM6bil in borrowings, while Sunway has over RM6bil in cash reserves which positions it to undertake the transaction without drawing on IJM’s funds.
“Some are claiming that we are using IJM’s cash to pay out the 10% : no, this is not true. It is coming from our own cash because our cash pile is RM6.7bil.
“Also when it comes to the total shareholders return which counts share price appreciation (or otherwise) and total dividends that are paid out over a 10 years period, Sunway is the number one among our peers with a 387% appreciation from 2016 to 2025,” Idris said.
The data compiled for the period showed Gamuda Bhd at 147%, YTL Corp Bhd 67%, Sime Darby Property Bhd 34%, IJM minus 9%, UEM Sunrise Bhd minus 45%, Malaysian Resources Corp Bhd minus 54% and SP Setia Bhd minus 75%.
“If you compare Sunway and IJM, it is very clear that the growth Sunway has experienced at 387% compared to minus 9% at IJM.
“This shows that Sunway has been able to extract tremendous value for shareholders.
“We are very confident that we can put the two companies together and leverage on each other’s strengths for great synergies. We are in the same line of business and we know this,” Idris said.
“Together we can grow as a national champion whereby the shareholders of both IJM and Sunway will be happy.
“This is a great opportunity for IJM to think of this as an opportune moment to come together to create a national champion – based on our track record,” Idris added.
Cheah meanwhile said Sunway is ‘very confident’ it would be able to extract better value for IJM’s shareholders (if acquired) from its existing assets.
“With proper strategic planning, we would move in a better direction ultimately if they are part of our Sunway group,” Cheah noted.
Commenting on PNB’s rejection which was reported in the news, Cheah said the fund may not have been serious as they had rejected it three weeks ahead of the deadline.
“Of course they are a big shareholder. My take is that they are playing a bit of poker but my hope is that they will come to their good reasoning and vote for this takeover when the time comes on April 6 - and I believe they will, based on our compelling offer. “If you are a big shareholder of a company that is not performing as compared to Sunway, wouldn’t you want to jump over to better returns?,” Cheah said.
“If you vote against it, I really don’t understand as there is money on the table but you don’t want to take it.
“People should come to their senses. And are they doing their fiduciary duty as asset managers, so they have to wake up,” he added.
Acknowledging that the offer’s 90% share component has drawn criticism from some investors who favour a higher cash element, Sunway in a statement said such concerns overlook its long-term performance relative to peers.
It noted accepting shares should be viewed as an opportunity to “re-position” into one of the strongest performing platforms in the sector with a demonstrated ability to generate sustained returns.
Sunway also noted that while IJM’s independent adviser has indicated an intrinsic value of above RM5 per share, the realisation of such value would depend on the successful execution of underlying strategies over time and prevailing market conditions.
IJM’s market performance over the past decade has not fully reflected this implied valuation, it said.
It also acknowledged that IJM has recently outlined plans to unlock value, including potential listings of its toll road assets and other subsidiaries.
But, Sunway said the successful execution of such initiatives would depend on a range of factors, including asset quality, market conditions, investor appetite and ability to deliver.
“In this regard, several of IJM’s toll road assets are currently loss-making, which may present challenges in achieving favourable outcomes in any potential listing exercise.
“Also past value-unlocking efforts by IJM involving listed subsidiaries have delivered varied results, with some subsequently being taken private, suggesting mixed outcomes from similar strategies,” Sunway said.
The group added the enlarged group is expected to benefit from operational synergies, including cost efficiencies, procurement optimisation, and improved margins, while also gaining stronger capabilities in infrastructure and engineering through IJM’s expertise.
In addition, the increased scale and financial strength would enhance access to funding and enable the group to pursue larger and more complex projects, particularly amid rising infrastructure investments and foreign capital inflows, it noted.
