Malaysia’s IJM board recommends rejection of Sunway’s ‘not fair and not reasonable’ takeover offer
Independent adviser M&A Securities says the offer price represents a 46.1-51.4% discount to IJM shares’ estimated value
Add BT as a preferred source
DeeperDive is a beta AI feature. Refer to full articles for the facts.
[SINGAPORE] The board of Malaysian property developer IJM Corporation on Friday (Mar 13) recommended that shareholders reject the RM11 billion (S$3.5 billion) takeover offer from rival developer Sunway because it is “not fair and not reasonable”.
The group’s Bursa Malaysia filing showed that the independent adviser, M&A Securities, found that the offer price of RM3.15 a share represents a 46.1 to 51.4 per cent discount to the estimated value of IJM shares.
This is based on a sum-of-parts valuation approach, which estimates the value of a group through its separate business segments.
Under the offer, shareholders will transition from holding 100 per cent equity interest in IJM into bearing around 20.6 per cent minority interests in Sunway.
This, the adviser said, means they will “no longer have direct influence over decisions” regarding IJM’s business and assets.
It also noted that Sunway shares are “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”.
Navigate Asia in
a new global order
Get the insights delivered to your inbox.
As the offer is predominantly in shares, accepting shareholders will not realise the immediate value in cash, M&A Securities said. Instead, they will “rely on the sustained market valuation of Sunway shares”.
The offer consists of 90 per cent new Sunway shares and 10 per cent cash.
Based on these reasons as well as others, the adviser found the offer not fair and not reasonable. IJM’s board said it agrees with the adviser’s analysis and unanimously recommends that shareholders reject the offer.
SEE ALSO
The offer’s first closing date is Apr 6.
Sunway announced its takeover offer for IJM in January. If it succeeds, the merger would create a conglomerate with a market value of RM50 billion, knitting together a land bank of 2,300 hectares, RM118.1 billion in gross development value and a potential RM13 billion order book.
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Copyright SPH Media. All rights reserved.
